When the price of good x increases, the substitution effect leads consumers to buy a. less of good x and more of substitute goods. b. less of good x and less of substitute goods. c. more of good x and less of substitute goods. d. more of good x and more of substitute goods.

A) Less of good x and more of substitute goods.

Explanation:

The substitution effect refers to the phenomenon that occurs when the demand for a product decreases because consumers turn to cheaper substitutes. This effect is related with the concept of elasticity of demand. A product with high elasticity, (elastic) will see the demand for it go down if the price goes up.

For example, if the price of a particular brand of soap goes up, the its demand will go down because people will substitute it with other brands.