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17 April, 02:59

Two brands of water, natural water and mountain water, are close substitutes. if the price of mountain water decreases, the fall in price

a. shifts the demand curve for natural water leftward.

b. shifts the demand curve for natural water rightward.

c. increases the price of natural water.

d. increases the demand for mountain water.

e. more information is needed to determine if the demand curve for natural water shifts rightward or leftward.

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  1. 17 April, 04:59
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    Substitute goods are those goods which as a result of change in market conditions such as changes in price can replace one another for example mountain water and natural water. They are goods with positive cross elasticity demand unlike the complementary goods (goods that are used together). In this case, if the price of mountain water decreases, the fall in price shifts the demand curve for natural water leftward. This means there will be an increased demand for mountain water and a decreased demand of natural water.
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