If the price of a product falls then quantity demanded tends to increase ceteris paribus because:
A. The MU/P ratio has decreased
B. Of the income and substitution effects
C. Consumers tend to feel poorer when prices fall
D. When price falls the demand curve shifts right
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Correct Answer : B.
when price of a product falls then consumer substitutes this product for others due to substitution effect and increase purchase generally since his real income (purchasing power) will increase due to income effect}