Given a downward sloping demand curve and an upward sloping supply curve for product X, an...
Given a downward sloping demand curve and an upward sloping supply curve for product X, an increase in the price of a substitute good (in consumption) will:
a.) increase equilibrium price and quantity of X
b.) decrease equilibrium price and quantity of X
c.) increase equilibrium price and decrease equilibrium quantity of X
d.) decrease equilibrium price and increase equilibrium quantity of X
Homework Answers
Given a downward sloping demand curve and an upward sloping supply curve for product X , an increase in the price of a substitute good will increase the demand for good X ,therefore demand curve will shift rightward. As a result , increases equilibrium price and quantity of X. Hence,option(A) is correct.
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