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D Question 3
Assume that the Honda Civic and the Toyota Carolla are substitute goods and the price of the Honda Civic Fall-
A. What is the impact on the Civic's market?
B. What is the impact on Toyota's market?
Increase in quantity supplied for Honda; decrease in quantity demanded for Toyota;
Increase in supply for Honda; decrease in demand for Toyota
O Increase in quantity demanded for Honda; decrease in demand for Toyota
Increase in demand for Honda; decrease in supply for Toyota
Co

Verified Answer :

GinnyAnswer

Final answer:

When the price of Honda Civic falls, there is an increase in quantity demanded for Honda and a decrease in demand for Toyota, as they are substitute goods.


Explanation:

Increase in quantity demanded for Honda; decrease in demand for Toyota is the impact on the Civic's market. This is because as the price of Honda Civic falls, consumers are more likely to demand Honda Civics over Toyota Corollas due to them being substitute goods.


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