When Mom buys more Jell-O⁽™⁾ because the price of pudding has risen, it is an example of the substitution effect.

Name: When Mom buys more Jell-O⁽™⁾ because the price of pudding has risen, it is an example of the substitution effect.
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Question

Quizplus · Accepted Answer

The substitution effect occurs when a consumer switches from one product to another due to a change in relative prices. In this case, Mom is switching from pudding to Jell-O because the price of pudding has risen, demonstrating the substitution effect.

When Mom Buys More Jell-O⁽™⁾ Because the Price of Pudding