If tastes for a good increased and the price of a substitute good decreased at the same time, as a result:

Question

Quizplus · Accepted Answer

The increase in tastes for a good would lead to an increase in demand, which would tend to increase both price and quantity exchanged. However, the decrease in the price of a substitute good would tend to decrease demand for the original good, which would tend to decrease both price and quantity exchanged. Without more information, we cannot determine which effect would be stronger, so we cannot predict whether prices or quantities exchanged would rise or fall.

If Tastes for a Good Increased and the Price of a Substitute