The substitution effect discourages the consumption of:
A) both goods when the price of one good increases.
B) the good for which price increases.
C) the good whose price hasn't changed when the price of one good increases.
D) both goods when the price of one good decreases.

Question

Quizplus · Accepted Answer

The substitution effect occurs when consumers react to an increase in a good's price by consuming less of that good and more of a substitute good, thus discouraging the consumption of the good whose price has increased.

The Substitution Effect Discourages the Consumption Of