Suppose That Goods X and Y Are Substitutes and the Price

question 84

Multiple Choice

Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect

• A) the quantity of good Y demanded to increase and the demand for good X to increase also.
• B) an increase in the demand for good X and a decrease in the quantity of good Y demanded.
• C) an increase in the quantity demanded of good Y and a decrease in the demand for good X.
• D) an increase in the demand for both good X and good Y.

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Definitions:

Cost

The value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore.

Composite Units

A measurement or costing method that combines different elements or articles to determine a standard unit rate or cost.

Sales Mix

The proportion of different products or services that a company sells, reflecting the variety and quantities sold.

Fixed Costs

Expenses that do not change in proportion to the level of activity or production, such as rent, salaries, and insurance premiums.