Question

50 This is a Multiple Choice question/It is worth 1 point/You have 1 of 1 attempts remaining/There is no attempt penalty 23 Question (1 point) 1st attempt If all else is held constant, what would happen to the equilibrium price and quantity of iPhones if the price of an Android phone decreased? Choose one A. The price would increase and the quantity would decrease. B. One would increase and one would decrease, but we don't know which would do what. C. The price would decrease and the quantity would increase. D. They would both decrease. E. They would both increase. O 21 OF 50 QUESTIONS COMPLETED SUBMIT ANSWER

Answer 1

A Substitute Good in economics means a good that can be used in place of another. In consumer’s theory, substitute goods are those products that can be perceived by a consumer which is comparable so that consuming one product makes the consumer desire less of the other product in economy. In the mentioned question both the products iPhone and Android phone are substitute to each other. If the price of Android phone decreases consumer will prefer more Android phones than iPhones. And the Quantity Demanded (QD) for Android phones will be higher in the market.

These can be shown in the following diagram:

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in the above Diagram when piece of android phone decreases demand for Android phone increases. Simultaneously the price of iPhone will decreases to attract more consumer and quantity of iPhone will be increased in the market. Hence, the answer will be option (C).