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When the price of a substitute of X commodity falls, the demand for X ———.
  • a)
    Rises
  • b)
    Falls
  • c)
    Remains unchanged
  • d)
    Any of the above.
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
When the price of a substitute of X commodity falls, the demand for X ...
Yes....the price falls.....
when price of a substitute falls that means it's demand rises...
being it a substitute the other commodity s demand falls...
because compared to the first product it's price is greater so it will have low demand as people will go for the first product.....

Hope it was helpful
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Community Answer
When the price of a substitute of X commodity falls, the demand for X ...
Explanation:

When the price of a substitute of commodity X falls, the demand for X falls as well. This is because a substitute is a good that can be used in place of another good. When the price of the substitute falls, consumers have an incentive to switch from commodity X to the substitute, as it becomes relatively cheaper.

Reasons why demand for X falls:

1. Substitution Effect: The decrease in the price of the substitute leads to a decrease in the price of using the substitute compared to commodity X. This makes the substitute relatively more attractive to consumers, leading them to switch from X to the substitute. As a result, the demand for X diminishes.

2. Price-Quantity Relationship: According to the law of demand, there is an inverse relationship between the price of a good and the quantity demanded, assuming other factors remain constant. When the price of the substitute falls, consumers perceive it as a better alternative to commodity X, resulting in a decrease in the quantity demanded of X.

3. Substitute Goods: Substitute goods are goods that can be used in place of each other. When the price of a substitute falls, it becomes more affordable and consumers are more likely to choose it over commodity X. This shift in consumer preference reduces the demand for X.

4. Income Effect: When the price of a substitute falls, consumers may experience an increase in their purchasing power. This allows them to allocate more of their income towards the substitute, reducing their demand for commodity X.

Conclusion:

In summary, when the price of a substitute of commodity X falls, the demand for X falls as well. This is due to the substitution effect, the price-quantity relationship, the availability of substitute goods, and the income effect. All these factors contribute to consumers switching from X to the substitute, resulting in a decrease in the demand for X.
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When the price of a substitute of X commodity falls, the demand for X ———.a)Risesb)Fallsc)Remains unchangedd)Any of the above.Correct answer is option 'B'. Can you explain this answer?
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