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:

David Ricardo

David Ricardo was a British political economist best known for his theories on comparative advantage, which describe how nations can benefit from trading.

International Trade

The exchange of goods and services between countries, which allows for greater diversity of products, lower prices, and increased economic efficiency.

Trade Adjustment Assistance Act

A U.S. law passed in 2002 that provides cash assistance, education and training benefits, health care subsidies, and wage subsidies (for persons age 50 or older) to workers displaced by imports or relocations of U.S. plants to other countries.

Displaced Workers

Individuals who have lost their jobs due to economic changes, technological advancements, or other factors outside their control.