Question

How would a sudden increase in the price of canned soup affect people's behavior? A. People would buy less soup B. People would buy more soup C. People would value the soup they eat more. D. People would find emotional incentives to buy soup.

Answer 1

A sudden increase in the price of canned soup would likely result in people buying less soup due to the substitution effect and income effect.

Step-by-step explanation:

A sudden increase in the price of canned soup would likely result in people buying less soup due to two interlinked motivations: the substitution effect and the income effect. The substitution effect means that when a good becomes more expensive, people seek out substitutes. In this case, if the price of canned soup increases, people may choose to buy other types of food instead. The income effect refers to how a change in price affects the buying power of income. If the price of canned soup rises, people may choose to buy less soup because their purchasing power has been reduced.

Answer 2

People would buy less soup

Step-by-step explanation:

When there is a sudden rise in the price of an item, it can be attributed to inflation, which also causes increase in the prices of energy, commodities and services in an economy.

Everyone gets affected by this and when there is increase in price, people are likely going to respond by purchasing less of that item since their purchasing power gets reduced in the process.