The price of butter increases. In two or three sentences, explain how a price increase in butter affects the demand for margarine.

Butter and margarine are substitute goods. Substitute goods are those goods which have similar functions and which can easily replace each other. Because the two products are substitute goods, if the price of butter increase in the market, the demand for butter will decrease and most people will start buying margarine instead of butter thus increasing the demand for margarine.

So, if the price of butter increase, the demand for margarine will increase.