According to the substitution effect, if the price of a product goes down
A) the consumer will buy more of the good at the lower price than at a higher price, creating a downward sloping demand curve.
B) the consumer will buy more of the good at a lower price than at a higher price, creating a horizontal demand curve.
C) the consumer will not change the level of purchases of the good when the price changes, making the demand curve a vertical line.
D) the real income of the consumer will increase, causing the consumer to want to buy more of the good, creating a downward sloping demand curve.

Question

Quizplus · Accepted Answer

The substitution effect suggests that as the price of a product goes down, consumers will substitute that product for other similar products that are now relatively more expensive, leading to an increase in quantity demanded. This leads to a downward sloping demand curve, as quantity demanded increases with decreasing price.

According to the Substitution Effect, If the Price of a Product