Question

A rise in the price of Pepsi that causes a household to shift its purchasing pattern toward Coke and away from Pepsi is the ________ effect of a price change. A) income B) substitution C) complementary D) diminishing marginal utility

Answer 1

Answer:

B

Explanation:

Substitution effect is the change in demand as a result of the change in the price of a good relative to the price of another good.

As a result of the increase in price of Pepsi, the demand for coke increases. This is an example of substitution effect