Question

At the grocery store, you learn that the price of butter has increased by a lot. Many people respond by buying margarine. This makes the demand for butter _____ and the demand for margarine _____.

a decrease, increase
a increase, decrease
a stay the same, stay the same

Answer 1

✐ Since more people are buying margarine instead of butter, the demand for butter decreases and the demand for margarine increases.

Answer: A

Hope that helps. -UF aka Nadia

Answer 2

Answer: decrease, increase

The term "demand" refers to how much consumers desire to own a product. This will indicate how much they are willing to pay for it. An increase in price will mean that demand will decrease, because less people will desire the product enough to pay the extra amount, and viceversa (if everything else stays equal). In this case, if the price of butter increases, it will decrease the demand for it. At the same time, it will increase the demand for margarine as a substitute.