The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corporation, makes a substitute good that it markets under the name “Y.” Good Y is an inferior good. a. How will the demand for good Xchange if consumer incomes decrease? It will stay the same. It will decrease. It will increase. b. How will the demand for good Ychange if consumer incomes increase? It will stay the same. It will decrease. It will increase. c. How will the demand for good Xchange if the price of good Y increases? It will stay the same. It will decrease. It will increase. d. Is good Y a lower-quality product than good X? Not necessarily - it could be higher or lower quality. No - good Y is a product of identical quality to good X. No - good Y is a higher quality product than good X. Yes - good Y is a lower quality product than good X.
The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corporation, makes a substitute good that it markets under the name “Y.” Good Y is an inferior good.
a. How will the
-
It will stay the same.
-
It will decrease.
-
It will increase.
b. How will the demand for good Ychange if consumer incomes increase?
-
It will stay the same.
-
It will decrease.
-
It will increase.
c. How will the demand for good Xchange if the price of good Y increases?
-
It will stay the same.
-
It will decrease.
-
It will increase.
d. Is good Y a lower-quality product than good X?
-
Not necessarily - it could be higher or lower quality.
-
No - good Y is a product of identical quality to good X.
-
No - good Y is a higher quality product than good X.
-
Yes - good Y is a lower quality product than good X.
As per the guidelines we are allowed to answer the first three sub parts only. Please post the remaining part separately.
Normal Goods: Normal goods are goods for which demand increases as consumer incomes rise and decreases as consumer incomes fall.
Inferior Goods: Inferior goods are goods for which demand decreases as consumer incomes rise and increases as consumer incomes fall.
Substitute goods are products that can be used as alternatives to one another to satisfy a particular consumer need or want. When the price of one substitute good increases, the demand for the other substitute typically increases because consumers tend to switch from the more expensive option to the cheaper one.
Step by step
Solved in 3 steps
