suppose the price of a bmw falls. the substitution effect means bmws are now relatively expensive than they…
suppose the price of a bmw falls. the substitution effect means bmws are now relatively expensive than they were before in relation to other cars, and consumers will buy bmws.
Answer
Brief Explanations:
When the price of a BMW falls, according to the substitution - effect in economics, it becomes relatively cheaper compared to other cars. Consumers will substitute other cars with BMWs and thus buy more BMWs.
Answer:
less; more