Substitution Effect of Price Change Discussion

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When the price of a good changes (decreases), it becomes less expensive which allows consumers to increase their satisfaction (purchase) for that good. Just the opposite happens when the price of a good changes increases. When the price of a good changes (increases), it become more expensive which changes the consumer satisfaction for that good causing the consumer to seek a substitution. This concept is the substitution effect of the price change. In this discussion forum, identify a consumer product that has decreased in price and discuss the increase in consumer demand for this product. What have consumer substituted because of this decrease in price.











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SUBSTITUTION EFFECT OF PRICE CHANGE.
Institution Affiliation
Date
When the price of a consumer product decreases, the consumer demand increases as
compared to its substitute product; this is called the substitution effect (Nickels et al. 76). The
same way when also the price of a consumer product rises, the consumer demand decreases, and
this results in the consumer switching to the substitute products. Let us take the example of
smartphones. There is an android smartphone, and then there is the iPhone. The iPhone has
always had a high price as a product compared to the android smartphone. Most people prefer
iPhones to Android smartphones due to its high-quality features that the android does not
possess; it all depends on the taste of the person on ...


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