Question

Which phrase describes the substitution effect?

A.) buying cheaper alternatives when a product becomes expensive
B.)replacing existing producers in a market with new producers
C.)replacing existing products in a market with higher-quality products
D.)substituting existing technology with a new technology to produce more goods

Answer 1

The correct answer to the question that is being stated above is letter A. buying cheaper alternatives when a product becomes expensive.

Buying cheaper alternatives when a product becomes expensive is an example of an action which best describes the substitution effect.

Answer 2

I believe the answer is: A.) buying cheaper alternatives when a product becomes expensive

Substitution effect refers to a situation when a change of component on a product would influence consumers to replace that product.
Factors that could cause a substitution effect could include things such as prices, availability, changes in material, etc.