The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corp., makes a substitute good that it markets under the name Y. Good Y is an inferior good. a. How will the demand for good X change if consumer incomes decrease? b. How will the demand for good Y change if consumer incomes increase? c. How will the demand for good X change if the price of good Y increases? d. Is good Y a lower-quality product than good X? Explain.
The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corp., makes a substitute good that it markets under the name Y. Good Y is an inferior good. a. How will the demand for good X change if consumer incomes decrease? b. How will the demand for good Y change if consumer incomes increase? c. How will the demand for good X change if the price of good Y increases? d. Is good Y a lower-quality product than good X? Explain.
Chapter6: Elasticity
Section: Chapter Questions
Problem 10QP
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The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corp., makes a substitute good that it markets under the name Y. Good Y is an inferior good. a. How will the demand for good X change if consumer incomes decrease? b. How will the demand for good Y change if consumer incomes increase? c. How will the demand for good X change if the price of good Y increases? d. Is good Y a lower-quality product than good X? Explain.
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