A rise in the price of Pepsi that causes a household to shift its purchasing pattern toward Coke and away from Pepsi is the ________ effect of a price change.
A) income
B) substitution
C) complementary
D) diminishing marginal utility

Question

Quizplus · Accepted Answer

The substitution effect occurs when consumers replace more expensive items with less costly alternatives, so a rise in the price of Pepsi leading to increased purchases of Coke represents this effect.

A Rise in the Price of Pepsi That Causes a Household