If bagels and croissants are substitute goods, which of the following is likely to occur if the price of bagels has decreased?
A) The demand curve for bagels shifts to the right.
B) A leftward movement along the bagel demand curve.
C) The demand curve for croissants shifts to the right.
D) The demand curve for croissants shifts to the left.
C) The demand curve for croissants shifts to the right.
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I apologize for the mistake. The correct answer is B) A leftward movement along the bagel demand curve.
When bagels and croissants are substitute goods, a decrease in the price of bagels would result in consumers switching from croissants to bagels, leading to a decrease in the demand for croissants and a leftward movement along the demand curve for bagels.
If bagels and croissants are substitute goods, it means that they can be used interchangeably to satisfy a similar need or want. In this case, if the price of bagels decreases, it is likely to have an impact on the demand for croissants.
The correct answer is C) The demand curve for croissants shifts to the right.
When the price of bagels decreases, some consumers may switch from purchasing croissants to bagels, as they are now relatively cheaper compared to croissants. This change in consumer behavior would lead to an increase in the demand for bagels and a decrease in the demand for croissants. As a result, the demand curve for croissants would shift to the right, representing a decrease in demand for croissants.
To determine the likely effect of a decrease in the price of bagels on the relationship between bagels and croissants, we need to understand how substitute goods interact.
Substitute goods are products that can be used in place of one another. If the price of one substitute good decreases, it is expected that consumers will switch to that good, resulting in a decrease in demand for the other substitute good.
In this case, if the price of bagels decreases, consumers will likely favor bagels over croissants since they are substitute goods. As a result, we can conclude that the demand for croissants is likely to decrease.
Therefore, the correct answer is:
D) The demand curve for croissants shifts to the left.
Explanation: When the price of bagels decreases, consumers will switch from croissants to bagels, leading to a decrease in the demand for croissants. This shift is represented by a movement of the demand curve for croissants to the left.