Good x and Good y are close substitutes. If the price of y increases what happens in the market for…
The demand curve for good x shifts to the right when the price of its close substitute y increases. Consumers switch towards x, increasing its demand at each given price of x.
Choose your answer
Good x and Good y are close substitutes. If the price of y increases what happens in the market for good x?
Answer and explanation
Correct answer D
The demand curve for good x shifts to the right when the price of its close substitute y increases. Consumers switch towards x, increasing its demand at each given price of x.
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Kerala SET (LBS Centre)