Two goods are considered substitutes when a decrease in the price of one good leads to an increase in the demand for the other good. So, the correct answer is:
- c) increases the demand for the other good
When the price of Good A drops, consumers will naturally gravitate towards A instead of Good B, leading to a decrease in the quantity demanded of B. This relationship illustrates how consumers switch their preferences based on price changes, demonstrating the fundamental nature of substitute goods. In essence, a lower price for one good makes it more attractive, causing a shift in consumer behavior.