Given the supply curve for butter, a reduction in the price of margarine will tend to:

Question

Quizplus · Accepted Answer

A reduction in the price of margarine will make it a more attractive substitute for butter. As a result, consumers will tend to buy more margarine and less butter, causing the demand for butter to decrease. This will lead to a surplus of butter, pushing down the price and shifting the supply curve to the right, resulting in a lower price for butter.

Given the Supply Curve for Butter, a Reduction in the Price