The Price of Good X Increases by 25%,causing the Quantity

question 95

Multiple Choice

The price of good X increases by 25%,causing the quantity consumed of good Y to decrease by 10%.If everything else is held constant in the economy,we can say with certainty that good X and good Y are:

• A) substitutes.
• B) inferior.
• C) complements.
• D) normal.
• E) unrelated.

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Definitions:

Factor Market

A marketplace where factors of production (e.g., labor, capital, land) are bought and sold.

Circular-Flow Diagram

A visual model of the economy that shows the flow of money, goods and services, and factors of production between households and businesses.

Firms

Businesses or companies that produce goods or provide services with the aim of making a profit.

Resources

Assets and inputs used to produce goods and services, such as time, labor, capital, and natural resources.