Practice Quiz

AP Microeconomics

Category - Microeconomics

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If Bread A and Bread B are substitutes for each other, which of the following things would cause the price of Bread B to rise?
  1. The price of Bread A rising
  2. The price of Bread B falling
  3. A decrease in grocery taxes
  4. A new nutritional study explaining that bread is a major contributor to obesity
Explanation
Answer - A - If Bread A and Bread B are substitutes for each other, the price of Bread A rising would cause the price of Bread B to rise.

Key Takeaway: If you encounter situational questions like this on the AP Microeconomics exam, think through each step logically. If the price of Bread A rises, this will cause the quantity demanded of Bread A to drop. If Bread B is a substitute for Bread A, there will be an increase in demand for Bread B. This increase in demand will cause in increase in the price for Bread B.
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