The price of a new textbook increases from $120 to $160, while the price of used copies of the textbook increased from $80 to $100. Other things being equal, we would expect
A)the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease.
B)the quantity demanded of both to fall.
C)the demand for the new textbook to increase and the demand for the used textbook to decrease.
D)the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.

Question

Quizplus · Accepted Answer

According to the law of demand, an increase in price leads to a decrease in quantity demanded. Therefore, we would expect the quantity demanded of the new textbook to decrease and the quantity demanded of the used textbook to increase. This is because people may switch to buying the cheaper used textbook as a substitute for the more expensive new textbook.

The Price of a New Textbook Increases from $120 to $160