If the price of potato chips falls, the substitution effect due to the price change will cause
A)an increase in the demand for potato chips.
B)an increase in the demand for corn chips, a substitute for potato chips.
C)an increase in the quantity of potato chips demanded.
D)a decrease in the quantity of potato chips demanded.

Question

Quizplus · Accepted Answer

When the price of potato chips falls, the substitution effect will cause consumers to switch from other snacks to potato chips, leading to an increase in the quantity of potato chips demanded. However, this does not necessarily result in an overall increase in demand for potato chips or an increase in demand for substitutes like corn chips.

If the Price of Potato Chips Falls, the Substitution Effect