Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:

Question

Quizplus · Accepted Answer

When the price of cassettes decreases, consumers will be more likely to choose cassettes over discs because they are substitutable goods. This means that the demand for discs will decrease and the demand curve will shift to the left. Option B would be incorrect because the demand for discs would not increase if consumers switch to cassettes. Option C is also incorrect because the production decisions of producers would not affect the demand for these goods. Option D is incorrect because although discs and cassettes are sold in separate markets, they are still considered substitute goods and pricing decisions in one market can affect demand in the other market.

Assuming Compact Discs and Cassettes Are Substitute Goods, a Decrease