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The price of good X falls and the demand for good Y decreases. We can conclude that

A. X and Y are substitutes.
B. X is a normal good.
C. X and Y are complements.
D. X and Y are substitutes in production.
E. X is an inferior good.

User Pbnelson
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1 Answer

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Final answer:

When the price of good X falls and the demand for good Y decreases, we can conclude that X and Y are substitute goods.

Step-by-step explanation:

When the price of good X falls and the demand for good Y decreases, we can conclude that X and Y are substitutes. Substitute goods have positive cross-price elasticities of demand, which means that a higher price for one good leads to greater consumption of the substitute good. In this case, the decrease in demand for good Y indicates that consumers are substituting it with good X due to the lower price.

User Hena Shiekh
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