Chapter 5, Problem 4MCQ

To determine

The question requires us to determine the good which demand would most likely fall when the price of butter falls.

Explanation of Solution

If two goods are better substitutes for each other, then a fall in the price of one good will cause the demand for the other good to fall.

For example, butter and margarine are substitute goods. When the price of butter fall, people will prefer butter over margarine because of the cheaper price. The lower price of butter will decrease the demand for margarine.

Thus, option “a” is correct.