Question

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apply the substitutional effect to the following example. the price of the name brand shampoo increases. what is the reaction of the consumers?

Explanation:

The substitution effect in economics suggests that when the price of a good (name - brand shampoo here) increases, consumers will look for cheaper substitutes. So, they will reduce their consumption of the name - brand shampoo and may switch to cheaper shampoos or store - brand alternatives.

Answer:

Consumers will reduce their consumption of the name - brand shampoo and may switch to substitute products (cheaper shampoos or store - brand shampoos).