When the relative price of a good increases, consumers respond by buying a. a larger quantity of that good and a larger quantity of substitutes for that good. b. a larger quantity of that good and a smaller quantity of substitutes for that good. c. a smaller quantity of that good and a larger quantity of substitutes for that good.

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Andrew Chen

Business

23 January, 11:11

When the relative price of a good increases, consumers respond by buying a. a larger quantity of that good and a larger quantity of substitutes for that good. b. a larger quantity of that good and a smaller quantity of substitutes for that good. c. a smaller quantity of that good and a larger quantity of substitutes for that good.

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Elliot · Answer 1

c. a smaller quantity of that good and a larger quantity of substitutes for that good.

Explanation:

The law of demand states that the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.

If the relative price of a good increases, consumers respond by buying less of the good and more of the substituite good.

Subsituite goods are at least two goods considered similar by a consumer and can be used in place of each other by the consumer.