If the price of quinoa, a substitute for rice, decreases, what effect does this have on both the price and quantity of rice?

When the price of quinoa, which is a substitute for rice, decreases, consumers are likely to buy more quinoa instead of rice. Substitutes are goods that can replace each other; when the price of one substitute drops, it becomes more attractive to consumers.

As a result of the decreased demand for rice (people are opting for the cheaper quinoa), the demand curve for rice shifts to the left. A leftward shift in the demand curve indicates that at any given price, consumers are now willing to purchase less rice than before.

With the decrease in demand for rice, the price of rice will tend to decrease. As the price of rice drops, consumers may begin to purchase more rice, but the overall effect of the decrease in demand, stemming from quinoa's lower price, leads to a reduction in the quantity of rice being sold in the market.

Thus, this situation is characterized by a decrease in the price of rice and a decrease in the quantity bought, making the correct outcome match the scenario described where the price of rice decreases and quantity increases as consumers adjust to the new market conditions surrounding quinoa.