asked 70.6k views
3 votes
Assuming pizza and hamburgers are substitutes, when the price of pizza increases, What must always happen?

A. The demand for hamburgers increases.
B. The demand for hamburgers decreases.
C. The quantity demanded of pizza increases.
D. The quantity demanded of pizza decreases.

asked
User Noppadet
by
7.2k points

1 Answer

6 votes

Final answer:

Option (A), When the price of pizza increases, the demand for hamburgers typically increases since they are substitute goods.

Step-by-step explanation:

Assuming pizza and hamburgers are substitutes, when the price of pizza increases, the demand for hamburgers increases. This is because as pizza becomes more expensive, consumers will look for a cheaper alternative, leading them to purchase hamburgers instead.

However, in a scenario where the price of a substitute good (like hot dogs) increases and the price of a complement good (such as hamburger buns) also increases, it's hard to predict with certainty what will happen to the demand for hamburgers. The increase in the price of hot dogs could lead to higher demand for hamburgers as a substitute, yet the increase in the price of hamburger buns could decrease demand for hamburgers because the overall cost of consuming hamburgers goes up.

answered
User RobbiewOnline
by
8.4k points
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