Question

For consumers, pizza and hamburgers are substitutes. a rise in the price of a pizza causes ________ in the equilibrium price of a hamburger and ________ in the equilibrium quantity of hamburgers. a a rise; a decrease b a rise; an increase c a rise; no change d a fall; a decrease e a fall; an increase

Answer 1

If pizza and hamburgers are substitutes, then a rise in pizza prices will cause consumers to move to hamburgers instead. Assuming a fixed supply curve for hamburgers, this will push out the demand curve, which will cause the equilibrium of the two curves to move to a point of higher price and higher quantity. As such, the correct answer is b: a rise; an increase.