Correct Option: B. It decreases the supply of the product. Detailed Explanation: To understand why a decrease in the price of a substitute good decreases the supply of a product, we first need to clarify some key concepts:

1. Substitute Goods: These are products that can replace each other in consumption. For example, if the price of coffee decreases, some consumers may choose to buy coffee instead of tea, which is a substitute for coffee.
2. Supply: This refers to the quantity of a good that producers are willing and able to sell at different prices. The supply of a product can be influenced by various factors, including the prices of related goods.

Now, let’s break down the relationship between the price of a substitute good and the supply of a product:

• Decrease in Price of Substitute: When the price of a substitute good decreases, it becomes more attractive to consumers. For instance, if the price of coffee drops significantly, consumers may buy more coffee instead of tea.
• Impact on Demand for the Original Product: As consumers shift their preferences towards the cheaper substitute (coffee), the demand for the original product (tea) decreases. This is because fewer people are willing to buy tea at the same price when they can get coffee for less.
• Effect on Supply: When the demand for tea decreases, producers may respond by reducing the quantity of tea they supply to the market. This is because they anticipate lower sales and may not want to produce as much tea if they expect it to sell less.
• Supply Curve Shift: In economic terms, a decrease in supply is represented by a leftward shift of the supply curve. This means that at every price level, the quantity supplied of tea is lower than before.

Why Other Options Are Incorrect:

• Option A: It increases the supply of the product.
• This option is incorrect because a decrease in the price of a substitute does not incentivize producers to supply more of the original product. Instead, it leads to a decrease in demand for the original product, prompting producers to supply less.
• Option C: It has no effect on the supply of the product.
• This option is also incorrect. The relationship between substitute goods means that a change in the price of one will affect the demand for the other, which in turn affects supply. Therefore, there is a clear effect on supply.
• Option D: It causes the supply curve to shift to the left.
• While this option is partially correct in that it describes the direction of the shift, it does not directly answer the question about the effect on supply. The correct answer is that it decreases the supply, which is more specific than just stating the direction of the shift.

Summary of Key Points:

• A decrease in the price of a substitute good leads to a decrease in demand for the original product.
• As demand for the original product decreases, producers reduce the quantity they are willing to supply.
• This results in a leftward shift of the supply curve for the original product.
• Understanding the relationship between substitute goods and supply is crucial for analyzing market dynamics.

Revision Summary:

• Substitute goods can replace each other in consumption; a price drop in one affects the other.
• A decrease in the price of a substitute decreases demand for the original product.
• Lower demand leads to a decrease in supply, shifting the supply curve left.
• Always consider how changes in related goods impact supply and demand dynamics.