A consumer consumes two normal goods,pretzels and Mt.Dew.The price of Mt.Dew rises.The substitution effect,by itself,suggests that the consumer will consume
A) more pretzels and more Mt.Dews.
B) fewer pretzels and fewer Mt.Dews.
C) more pretzels and fewer Mt.Dews.
D) fewer pretzels and more Mt.Dews.

Question

Quizplus · Accepted Answer

The substitution effect suggests that when the price of Mt.Dew rises, the consumer will substitute away from the now more expensive good (Mt.Dew) and consume more of the relatively cheaper good (pretzels).

A Consumer Consumes Two Normal Goods,pretzels and Mt