Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
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Question
Chapter 5, Problem 4MCQ
To determine
The question requires us to determine the good which demand would most likely fall when the price of butter falls.
Expert Solution & Answer
Explanation of Solution
If two goods are better substitutes for each other, then a fall in the price of one good will cause the demand for the other good to fall.
For example, butter and margarine are substitute goods. When the price of butter fall, people will prefer butter over margarine because of the cheaper price. The lower price of butter will decrease the demand for margarine.
Thus, option “a” is correct.
Chapter 5 Solutions
Krugman's Economics For The Ap® Course
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