If mayonnaise and Miracle Whip are substitutes, then which of the following would increase the demand for Miracle Whip? a. a decrease in the price of Miracle Whip b. an increase in the price of mayonnaise c. a decrease in the price of mayonnaise d. Both a and b are correct.

Question

Social Studies

Flakey

26 September, 18:47

If mayonnaise and Miracle Whip are substitutes, then which of the following would increase the demand for Miracle Whip? a. a decrease in the price of Miracle Whip b. an increase in the price of mayonnaise c. a decrease in the price of mayonnaise d. Both a and b are correct.

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Answers (1)

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Reeve · Answer 1

The correct answer is option b.

Explanation:

Mayonnaise and miracle whip are substitutes. This means they can be used in each other's place. The substitute goods have a positive price elasticity, that is when the price of a good increases the demand for its substitute will increase.

This is because when the price of a product increases, the consumers will prefer its cheaper substitute. So the demand for substitutes will increase.

We are aware that the price of a product is inversely related to its quantity demanded. So when there is a decrease in the price, the quantity demanded decreases. This is shown by a movement along the same demand curve, the demand though remains the same.