If the price of orchids falls, the substitution effect due to the price change will cause an increase in the:
A)demand for orchids.
B)demand for roses, a substitute for orchids.
C)quantity demanded of orchids.
D)quantity supplied of orchids.

Question

Quizplus · Accepted Answer

The substitution effect due to a fall in the price of orchids will cause consumers to switch from substitutes (such as roses) to orchids. This shift in consumer preferences will result in an increase in the quantity demanded of orchids, rather than an increase in the demand for orchids as a whole. The demand curve for orchids remains the same; only the quantity demanded changes along the curve. The quantity supplied of orchids is determined by how much suppliers are willing to produce at a given price and is not affected by changes in the price of orchids.

If the Price of Orchids Falls, the Substitution Effect Due