Question

ramesh has bought 1 kg of tea powder instead of expensive coffee powder identify and explain the concept​

Answer 1

Answer:

The concept used here is Substitution Effect.

Explanation:

If the price of substitute goods are cheaper, the consumers tend to consume the cheaper product to satisfy themselves. In the above given case the coffee was expensive than the tea powder, hence the consumer(Ramesh) bought 1kg of tea powder.

Answer 2

Answer:

Here the concept involved is Substitution Effect.

Explanation:

• Substitution Effect: When the price of a product is increased then the consumers substitute the product by its similar type of product, this incident is called substitute effect.
• Example: Suppose suddenly the price of mustard oil is increased, then people start to use refined oil instead of mustard oil. So here the mustard oil is substituted by the refined oil due to increasing price.
• In question it is mentioned that coffee powder is expensive. Ramesh has bought tea powder by substituting coffee powder. So here the substitution of product is happened. The effect involved is substitution effect.

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