The fact that consumers will purchase more of a good that has become relatively cheaper
A) is called the nominal income effect.
B) is called the substitution effect.
C) leads to an upward sloping demand curve.
D) leads to negative marginal utility.

Question

Quizplus · Accepted Answer

The fact that consumers will purchase more of a good that has become relatively cheaper is called the substitution effect. This is because consumers will substitute the relatively cheaper good for more expensive alternatives, causing an increase in demand for the cheaper good.

The Fact That Consumers Will Purchase More of a Good