Assume the price of Advil increases. As a result, you decrease the quantity of Advil purchased each month and purchase more Tylenol. This is an example of the:
A) income effect.
B) utility effect.
C) consumption effect.
D) substitution effect.

Question

Quizplus · Accepted Answer

This scenario describes the substitution effect, where the increase in price of one good (Advil) leads to consumers substituting it with another similar good (Tylenol) that is now relatively cheaper in comparison.

Assume the Price of Advil Increases