Question

If bagels and doughnuts are substitute goods, then which scenario is likely to occur if the price of bagels is reduced? The demand curve for bagels will shift to the left. The demand curve for doughnuts will shift to the left. The demand curve for doughnuts will shift to the right. There will be a leftward movement along the bagel demand curve.

Answer 1

Answer:The demand curve for doughnuts will shift to the left.

Explanation:

For close substitute products the effect on the price of one substitute will affect the demand of the other substitute, if one substitute faces price fall the demand of the other substitute will fall .

How does Shifts in demand occur?

Depending on the demand the curve will shift to the right or left

When the demand increases the demand curve shift to the right .

Which may be due to things like a price increase of a substitute or a price fall of the complement.

This shift to the right is mostly determined by how popular a product is which could make people buy it irrespective of how much it cost.

Decreases in demand will result in shifting of a demand curve to the left which may be due to a price fall of the substitute product or a rise price of the complement or when people no longer have enough money to buy the product.