Pizza and tacos are substitutes,and the price of a pizza increases.Which of the following correctly indicates what happens?
A) The demand for pizzas decreases and the demand for tacos increases.
B) The demand for both goods decreases.
C) The quantity of tacos demanded increases and the quantity of pizza demanded decreases.
D) The quantity of pizza demanded decreases and the demand for tacos increases.
E) The demand for each decreases because both are normal goods.

Question

Quizplus · Accepted Answer

Since pizza and tacos are substitutes, an increase in the price of pizza will lead to a decrease in the quantity demanded of pizza and an increase in the demand for tacos as consumers switch to the substitute good. This is reflected in Choice D, which correctly states that the quantity of pizza demanded decreases and the demand for tacos increases.

Pizza and Tacos Are Substitutes,and the Price of a Pizza