Question

If tablet computers are considered substitutes for e-readers, the decline in the price of tablet computers would, all else equal A. increase the demand for e-readers. B. decrease the demand for e-readers. C. increase the quantity demanded for e-readers. D. decrease the quantity demanded for e-readers.

Answer 1

Answer:

B. decrease the demand for e-readers.

Explanation:

Substitute Good is a factor effecting demand of a good. A good's demand and it's substitute good's price are directly related.

• Price rise of a good's substitute makes the good relatively cheaper & increases that good's demand.
• Price fall of a good's substitute makes the good relatively expensive & decreases that good's demand

So, If tablet computers & e - readers are substitutes : Decline in price of tablet will make e - readers relatively expensive & decrease the demand for e - readers.