How does change in price of Substitutes affect on Supply Curve ?

Asked by raksha2sanubth | 21st Jul, 2020, 09:57: PM

Expert Answer:

When the price of the substitute good rises, then prodcution of that good is more profitable in comparison to the given good. As a result supply falls and this leads to leftward shift in the supply curve.

On the other hand, if the price of the substitute good falls thus making the given good more profitable, this leads to increase in supply and rightward shift in the supply curve.

Answered by Christina | 22nd Jul, 2020, 09:37: AM

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