When the price of a good falls, consumers buy more of the good because it is cheaper relative to competing goods. This statement describes the
A) consumer equilibrium effect.
B) price effect.
C) income effect.
D) substitution effect.

Question

Quizplus · Accepted Answer

The substitution effect occurs when a good becomes cheaper relative to other goods, leading consumers to substitute the cheaper good for more expensive alternatives.

When the Price of a Good Falls, Consumers Buy More