Suppose that tortilla chips and potato chips are substitutes goods for each other. Which of the following can cause the demand for potato chips to fall?

Suppose that tortilla chips and potato chips are substitutes goods for each other. Which of the following can cause the demand for potato chips to fall?

	a.	if potato chips are a normal good, a fall in consumers’ incomes
	b.	if potato chips are a normal good, a rise in consumers’ incomes
	c.	if potato chips are an inferior good, a fall in consumers’ incomes
	d.	none of the abov

Solutions

Expert Solution

Ans. a) if potato chips are a normal good, a fall in consumer's income.

When the good is normal, consumers income and the demand for the good is positively related. Hence, an increase in income causes an increase in the demand for the good and the decrease in income causes a decrease in the demand for the good.

Rahul Sunny answered 1 year ago

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