Question

As the price of a good increase, all else being equal, consumers will likely purchase _____.(1 point)

Answer 1

As the price of a good increase, consumers will likely purchase less of the good because substitutes have become relatively less expensive.

What is Substitution Effect

       Substitution effects describes a situation where consumers opt for the substitute of a product when the price of their choice product increases either above their budget or above their purchasing capability.

       Therefore, the substitution effect refers to the change in demand for a good as a result of a change in the relative price of the good which is usually an increase in price when  compared to that of other substitute goods.

   This scenario will sway consumers  away from the good toward its substitutes.

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