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The price of gas has increased and people are moving away from their old gas guzzlers to more fuel-efficient cars. This is an example of –

learning effect

complementary effect

income effect

substitution effect

Respuesta :

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Answer:

Substitution effect

Explanation: From the word substitute, the substitution effect could be inferred to mean the shift from a certain product or market to another usually due to increase in the price of the currently favored product to an alternative which seems less pricier and delivers almost the same level of quality. In most instances, economic imbalance often leads to consumers seeking for substitute products in other to balance up with their earning. When the price of a increases without simultaneousnincrease in economic growth which also translates into higher earning by consumers, then consumers will have to seek alternative products in other to maintain and balance spending.

If the price of a gas or an item increase then the people start to move towards those items that have less or least cost sech as in the case of the old fuel-efficient cars to fuel-efficient.

  • This is known as the substitution effect. The effect is one consumer price theory that is the effect of changes in the price of a good on the amount being demanded.  
  • For an example the coffee and tea are demanded and of there is a rise in the rise of coffee then the consumers of hot drinks may decide to take in tea.

Hence the option D is correct.

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