There are many options available to consumers when it comes to toothpaste. So, if Procter & Gamble significantly increases the price of Crest toothpaste, consumers are more apt to buy alternate toothpaste instead. This illustrates which concept?
A)the income effect
B)the substitution effect
C)the break-even point
D)the target return effect
E)cross-price elasticity

Question

Quizplus · Accepted Answer

The scenario described in the question is an example of the substitution effect, which refers to the tendency of consumers to switch to a substitute or alternative product if the price of their preferred brand or product increases. In this case, if Procter & Gamble increases the price of Crest toothpaste, consumers are likely to switch to a cheaper alternative toothpaste. Therefore, the substitution effect is the most relevant concept illustrated in this scenario.

There Are Many Options Available to Consumers When It Comes