If ratatouille and Hungarian goulash are substitutes, a decrease in the price of Hungarian goulash will cause the demand for:
A)ratatouille to increase.
B)Hungarian goulash to increase.
C)ratatouille to decrease.
D)Hungarian goulash to increase and the demand for ratatouille to decrease.

Question

Quizplus · Accepted Answer

When the price of a substitute good (Hungarian goulash) decreases, consumers will switch to the cheaper option, leading to a decrease in the demand for the other substitute (ratatouille).

If Ratatouille and Hungarian Goulash Are Substitutes, a Decrease in the Price