39.1k views
5 votes
If chicken and beef are substitutes, then a fall in the price of chicken will bring about:

A) no change in the demand for beef.

B) a decrease in the quantity demanded of beef.

C) an increase in the demand for beef.

D) a decrease in the demand for beef.

User Rabbit
by
7.9k points

1 Answer

5 votes

Final answer:

In the context of substitutes, a decrease in the price of chicken leads to a decrease in the demand for beef, as consumers tend to substitute chicken for beef due to its lower cost.

Step-by-step explanation:

If chicken and beef are substitutes, then a fall in the price of chicken will lead to a behavior known as the substitution effect. Consumers, seeing that chicken is now cheaper than before, are likely to buy more chicken instead of beef, because they can get a similar product for a lower cost. This behavior will result in a decrease in the demand for beef.

Therefore, the correct answer to the question is (D) a decrease in the demand for beef. Both the substitution effect and the income effect can influence consumer choices when the price of a product changes. In the case of a price decrease in chicken, consumers would not only prefer chicken over beef due to its lower price but also because they effectively have more purchasing power, they might increase their overall consumption of chicken. However, the primary reaction we are focused on is the substitution towards the cheaper substitute, which in this case is chicken.

User RyanKim
by
8.0k points