Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer’s perspective) will

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer’s perspective) will

Multiple Choice: A. increase equilibrium price and decrease equilibrium quantity

.B. decrease equilibrium price and quantity.

C. increase equilibrium price and quantity.

D. decrease equilibrium price and increase equilibrium quantity

Answer

C. increase equilibrium price and quantity.

Basically, the price of this commodity will rise because buyers will be left with close to one option as the main way of meeting the need and this would even cause the demand of the substitutes themselves decreasing 

Explanation

This is generally because an increase in price of substitutes relative to the given commodity, the price of this commodity will rise because buyers will be left with close to one option as the main way of meeting the need and this would even cause the demand of the substitutes themselves decreasing as people shift their demand to this commodity whose price had not increased. This in the long run, will cause the supply to reduce relative to the demand which according to the law of demand and supply, will force the suppliers to raise the price and also increase the quantity of the commodity