Question

Suppose pizzas and burgers are substitutes. If the price of pizza increases, what happens in each market?

a.Move upward and to the left along the demand curve for pizzas and the demand curve for burgers shifts to the right
b.Move upward and to the left along the demand curve for burgers and the demand curve for pizzas shifts to the right
c.Move downward and to the right along the demand curve for burgers and the demand curve for pizzas shifts to the left

Answer 1

The correct answer is option a.

Step-by-step explanation:

Pizzas and burgers are substitutes. This implies that they are used in place of each other. If the price of pizza increases, its quantity demanded will decrease. This will be indicated by an upward movement to the left on the same demand curve.

The consumers will prefer a cheaper substitute, as a result, the demand for burgers will increase. This will be indicated by a rightward shift in the demand curve for burgers.