When consumers shift away from relatively higher price goods and services in favor of those that are less expensive, this is known as the
A) principle of utility.
B) principle of substitution.
C) principle of supply.
D) principle of increasing opportunity costs.

Question

Quizplus · Accepted Answer

The principle of substitution states that consumers shift away from relatively higher price goods and services in favor of those that are less expensive. This occurs because consumers always seek the highest satisfaction at the lowest cost. Therefore, when a higher-priced option becomes too expensive, consumers will substitute it for a lower-priced alternative that can provide similar benefits.

When Consumers Shift Away from Relatively Higher Price Goods and Services