The price of chicken has doubled. According to the ______ effect, Andrea will purchase _____ chicken and more peanut butter instead.
A) substitution; less
B) substitution; more
C) income; less
D) income; more

Question

Quizplus · Accepted Answer

The substitution effect occurs when consumers react to an increase in a good's price by consuming less of that good and more of a substitute good. In this case, as the price of chicken has doubled, Andrea is likely to purchase less chicken and more of a substitute good like peanut butter, according to the substitution effect.

The Price of Chicken Has Doubled