What will likely happen if the price of a substitute good increases?

What will likely happen if the price of a substitute good increases?

• A. The demand for the original good will decrease
• B. The demand for the original good will remain unchanged
• C. The demand for the original good will increase
• D. The supply of the original good will increase

Answer: (C)

When the price of a substitute good increases, consumers often seek alternatives that are now relatively cheaper. In this context, if the price of the substitute rises, the original good becomes a more attractive option for consumers who are looking to maintain their utility while managing costs. As a result, they will likely increase their demand for the original good, as it now provides better value compared to the more expensive substitute. This relationship is a fundamental concept in microeconomics, illustrating how the demand for a good can shift in response to price changes of its substitutes. Therefore, an increase in the price of a substitute good typically leads to an increase in the demand for the original good.

When the price of a substitute good increases, consumers often seek alternatives that are now relatively cheaper. In this context, if the price of the substitute rises, the original good becomes a more attractive option for consumers who are looking to maintain their utility while managing costs. As a result, they will likely increase their demand for the original good, as it now provides better value compared to the more expensive substitute.

This relationship is a fundamental concept in microeconomics, illustrating how the demand for a good can shift in response to price changes of its substitutes. Therefore, an increase in the price of a substitute good typically leads to an increase in the demand for the original good.