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Question
The relationship between demand for a good and the price of its substitute is ______.
Options
direct
inverse
no effect
can be direct and inverse
MCQ
Fill in the Blanks
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Solution
The relationship between demand for a good and the price of its substitute is direct.
Explanation:
When the price of a commodity rises, the consumer tends to buy more of its substitute and less of that commodity whose price has increased. This is known as the substitution effect.
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