Question

Assume that beef and chicken are substitutes. If the price of beef increases, all other things being equal, demand for chicken will increase. True or false?

Answer 1

Answer:

True

Explanation:

This is a true statement. The beef and chicken are substitute goods. The substitute goods are generally have a positive cross price elasticity of demand which states that there is a direct relationship between the price of beef and the demand of chicken.

If the price of beef increases then as a result the demand for chicken increases and if the price of beef decreases then as a result the demand for chicken decreases.