The switching from old gas guzzlers to more fuel-efficient cars is an example of substitution effect.
Substitution effect is the switching of customer from a more expensive product to a cheaper product. This is usually because of an increase in price or a decrease in the customers income.
Substitution effect can be positive for consumers if they can continue to by the products they like. Also, this effect can be negative for consumers if it results in fewer choices of that product or products of lower quality.
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The answer is c, hope this helps
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Answer:
The formula for an average rate of return is derived by dividing the average annual net earnings after taxes or return on the investment by the original investment or the average investment during the life of the project and then expressed in terms of percentage.
