Get expert advice and insights on any topic with IDNLearn.com. Get prompt and accurate answers to your questions from our community of knowledgeable experts.
Sagot :
It works because the product is now relatively more expensive than it was before.
The substitution effect occurs when the sale of a product decreases because the consumer moved their interest to some other cheaper product when its price increases. There is a condition here that the product needs to have some similarities between them. For example, Fountain pen or Ink pen, Pepsi or Cola, Tea or Coffee, etc. However, there are also exceptions present there that do not follow the substitution effect.
So if the price of Pepsi increases then the customers will start shifting toward Cola and the sales of Pepsi will decrease. This is the substitution effect.
The substitution effect doesn't explain the income factor and only the price is considered here. Therefore, the other options are incorrect as either they refer to the income of the consumer or don't match with the substitution effect.
Learn more about the substitution effect here: https://brainly.com/question/1319399
#SPJ4
Thank you for joining our conversation. Don't hesitate to return anytime to find answers to your questions. Let's continue sharing knowledge and experiences! IDNLearn.com is dedicated to providing accurate answers. Thank you for visiting, and see you next time for more solutions.
