Question

As the price of online movie streaming services decreased, the quantity demanded of those services increased,...

As the price of online movie streaming services decreased, the quantity demanded of those services increased, and the demand for DVDs decreased. This is an illustration of

Question 21 options:

A)

 consumer sovereignty.

B)

 diminishing marginal utility.

C)

 the substitution effect.

D)

 the income effect.
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Homework Answers

Answer #1

21. Due to decrease in the price of streaming online movie services the quantity demanded will increase. Thus, the aggregats demand for online-movie streaming will increase and the demand for Dvd will decrease.

Hence, we can conclude that due to a lower price the consumers will continue with the same company. Hence, it is due to the substitution effect.

Option C. The substitution effect.

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