Question 4A decrease in the price of butter will _________ the demand for margarine, a substitute for butter.1 pointNot changeWe can’t sayIncreaseDecrease
Question
Question 4
A decrease in the price of butter will _________ the demand for margarine, a substitute for butter.
1 point
- Not change
- We can’t say
- Increase
- Decrease
Solution
To analyze the relationship between the price of butter and the demand for margarine, we need to consider the concepts of substitutes in economics.
1. Understanding Substitutes
Butter and margarine are considered substitute goods, meaning that as the price of one good changes, the demand for the other good will react inversely.
2. Effect of Price Change
When the price of butter decreases, consumers will tend to buy more butter because it becomes cheaper. As a result, they will buy less margarine, as it is a substitute.
3. Conclusion
Therefore, the demand for margarine will decrease when the price of butter falls.
Final Answer
A decrease in the price of butter will decrease the demand for margarine.
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