The idea that people will substitute cheaper commodities for more expensive commodities is called
A) the marginal effect.
B) the real-income effect.
C) the substitution effect.
D) the utility effect.

Question

Quizplus · Accepted Answer

The substitution effect is the idea that when the price of a good or service increases, people will look to substitute it with a cheaper alternative. This is because consumers aim to maximize their utility while minimizing their expenses. Thus, the substitution effect can influence a consumer's purchasing decision and impact the demand for a particular product.

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