Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an:

Question

BlackTom AI · Accepted Answer

Consider the scenario where goods A and B are close substitutes. When the price of A falls, consumers respond first by increasing the quantity demanded of A itself due to the downward-sloping demand curve for A. At the same time, because A becomes relatively cheaper than B, some buyers switch away from B to A, which lowers the overall demand for B.

Option 1: 'Increase in the demand for A and an increase in the quantity of B demanded' would imply that B becomes more desirable or that consumers simultaneously want more of both goods. Since A’s price drop makes A cheaper relative to B, demand for B is unlikely to rise; this contradicts the substitution effect.

Option 2: 'Increase in the demand for A and a decrease in the quantity of B demanded' mixes two ideas that are not aligned. While the quantity demanded for A should rise, the phrasing about B’s "quantity demanded" decreasing ignores that price movement typically affects B’s whole demand, not just a shift in quantity in the same sense. The standard effect is a shift in B’s demand downward (a decrease in quantity demanded at the original price) rather than a pure change in quantity demanded depending on the context.

Option 3: 'Increase in the quantity of A demanded and a decrease in the demand for B' aligns with the core substitution-insight: A becomes cheaper, more people buy more of A (quantity demanded increases), and fewer people demand B (demand for B decreases due to substitution).

Option 4: 'Increase in the demand for good A as well as for good B' suggests both goods become more demanded in total, which contradicts the logic of substitutability when A’s price falls; B’s demand would not rise as consumers substitute toward the cheaper option.

In summary, the only option that cleanly matches the standard substitution effect and the law of demand for A is option 3, which describes a higher quantity demanded for A and a decreased demand for B as a result of A’s price fall.

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an:

查看解析

登录即可查看完整答案

类似问题

When the price of Blu-ray players dropped, the demand for DVD players went down. This tells us that DVD players and Blu-ray players are

Suppose that the demand for emu leather falls after a decrease in price of snake skin. This would mean that emu leather is:

When the price of Blu-ray players dropped, the demand for DVD players went down. This tells us that DVD players and Blu-ray players are

Jamestown heating and air-conditioning company specializes in electric heat pumps. The business should keep track of the price of natural gas, knowing that

MC Qu. 101 If the price of gasoline increases significantly... If the price of gasoline increases significantly, then we’d expect the price for hybrid and electric cars to BlackTom Analysis

If two goods are substitutes, what happens when the price of one rises?

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an:

If two goods are substitutes, what happens when the price of one rises?

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单