405674student 405674student
  • 17-08-2017
  • SAT
contestada

Which phrase describes the substitution effect?

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Kalahira
Kalahira Kalahira
  • 25-08-2017
When the price of goods is increased and the consumers income stays constant they may begin to look for a similar item at a lower price to stay in budget and maintain their way of life. The substitution effect will always a negative one on the consumers end because the demand for the item does not change so it forces people to look elsewhere for an item they may have routinely used before. Thus, the correct answer is buying cheaper alternatives when a product becomes expensive.
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