Question

If two commodities are substitutes a change in the price of one, ceteris paribus, causes a change in the quantity purchased of the other __________.

• A. in the same direction
• B. in the opposite direction
• C. in an insignificant manner
• D. cannot be determined

Answer 1

The correct option is A in the same direction

In the case of substitutes, the price of one substitute good shares a direct/positive relationship with the demand for other good. Hence, price of one substitute good and the demand for another substitute good, from a pair of substitute goods, move in the same direction.