If the price of Good G rises, what is likely to happen to the demand for comparable Good H?

If the price of Good G rises, what is likely to happen to the demand for comparable Good H?

• A. The demand for Good G will stay the same
• B. The demand for Good G will increase
• C. The demand for Good H will increase
• D. The demand for Good H will decrease

Answer: (C)

When the price of Good G rises, it is likely that the demand for a comparable Good H will increase. This relationship is based on the concept of substitute goods in economics. Substitutes are products that can be used in place of one another. When the price of Good G increases, consumers may find it less attractive to purchase Good G and may seek alternatives to satisfy their needs. Thus, they will start buying more of Good H, which fulfills a similar purpose. For instance, if Good G is a brand of coffee and its price rises significantly, consumers might switch to a comparable brand or type of coffee, represented by Good H, leading to an increase in its demand. This shift occurs because consumers typically seek to maximize their utility while minimizing costs, prompting them to re-evaluate their purchasing decisions in light of price changes. Therefore, a rise in the price of Good G tends to lead to an increase in the demand for Good H, demonstrating the direct interplay between substitutes in consumer choice.

When the price of Good G rises, it is likely that the demand for a comparable Good H will increase. This relationship is based on the concept of substitute goods in economics.

Substitutes are products that can be used in place of one another. When the price of Good G increases, consumers may find it less attractive to purchase Good G and may seek alternatives to satisfy their needs. Thus, they will start buying more of Good H, which fulfills a similar purpose. For instance, if Good G is a brand of coffee and its price rises significantly, consumers might switch to a comparable brand or type of coffee, represented by Good H, leading to an increase in its demand.

This shift occurs because consumers typically seek to maximize their utility while minimizing costs, prompting them to re-evaluate their purchasing decisions in light of price changes. Therefore, a rise in the price of Good G tends to lead to an increase in the demand for Good H, demonstrating the direct interplay between substitutes in consumer choice.