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WAEC Economics 2021 Question 8

Question 8

Theory of Demand

What will be the reaction of consumers in a market if there is a fall in the price of the substitute commodity X?

  1. A.Price of commodity X will increase
  2. B.Demand for the substitute of commodity X will decrease
  3. C.Demand for commodity X will decrease
  4. D.Supply of both commodity X and its substitute will increase.
Show the answer and explanation

Answer: C (Demand for commodity X will decrease)

Explanation

If X's substitute becomes cheaper, consumers switch to it and demand for X falls.