Multiple choice

The requirement is to determine the immediate effect on one product of an increase in the price of a substitute good. The demand and price of substitute products are directly related. If the price of a good increases, the demand for its substitute will also increase. X and Y are substitute products. If the price of product Y increases, the immediate impact on product X is ____________.

  1. price will increase

  2. quantity demanded will increase

  3. quantity supplied will increase

  4. price, quantity demanded and supply will increase

  5. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Correct, because the demand and price of substitute products are directly related. If the price of a good increases, the demand for its substitute will also increase. It depicts this relationship.

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