When one substitute good becomes more expensive, what is likely to happen to the demand for its alternative?

When one substitute good becomes more expensive, what is likely to happen to the demand for its alternative?

• A. Demand for the alternative will likely decrease
• B. Demand for the alternative will likely increase
• C. Demand will remain the same
• D. Demand will become unpredictable

Answer: (B)

When the price of one substitute good increases, consumers are likely to switch to its alternative, which typically means that demand for that alternative will increase. This relationship is an essential component of the law of demand and substitutes in economics. Substitutes are goods that can be used in place of one another; for instance, if the price of coffee rises significantly, consumers might turn to tea as a cheaper alternative. This shift is based on the basic principle that as the price of a good rises, consumers look for less expensive options to meet their needs. As a result, the demand for the alternative increases because more consumers seek to take advantage of the price difference, reflecting a dynamic response to changes in market conditions. Thus, an increase in the price of one substitute leads to an increase in demand for its alternative, reinforcing the connection between price changes and consumer behavior in a free enterprise system.

When the price of one substitute good increases, consumers are likely to switch to its alternative, which typically means that demand for that alternative will increase. This relationship is an essential component of the law of demand and substitutes in economics.

Substitutes are goods that can be used in place of one another; for instance, if the price of coffee rises significantly, consumers might turn to tea as a cheaper alternative. This shift is based on the basic principle that as the price of a good rises, consumers look for less expensive options to meet their needs. As a result, the demand for the alternative increases because more consumers seek to take advantage of the price difference, reflecting a dynamic response to changes in market conditions.

Thus, an increase in the price of one substitute leads to an increase in demand for its alternative, reinforcing the connection between price changes and consumer behavior in a free enterprise system.