Use the following to answer question:
Figure 5.9
-(Figure 5.9) When the price of milk drops, the substitution effect _____ the quantity of milk consumed from _____.

Question

Use the following to answer question:
Figure 5.9 
-(Figure 5.9) When the price of milk drops, the substitution effect _____ the quantity of milk consumed from _____.

Quizplus · Accepted Answer

The substitution effect causes consumers to switch to the now relatively cheaper good, leading to an increase in quantity consumed. In this case, the drop in price of milk would lead consumers to switch from alternative goods to milk, increasing the quantity of milk consumed from 2 to 4 gallons.

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