Suppose the price of good X increases and consumers purchase more of good Y. Which of the following statements is necessarily true about good Y?
A)Good Y is a normal good.
B)Good Y is an inferior good, but not a Giffen good.
C)Good Y is an inferior good and a Giffen good.
D)Good Y could be a normal or inferior good.

Question

​Suppose the price of good X increases and consumers purchase more of good Y. Which of the following statements is necessarily true about good Y?
A)​Good Y is a normal good.
B)​Good Y is an inferior good, but not a Giffen good.
C)​Good Y is an inferior good and a Giffen good.
D)​Good Y could be a normal or inferior good.

Quizplus · Accepted Answer

When the price of good X increases and consumers purchase more of good Y, it indicates that good Y is a substitute for good X. This substitution effect does not necessarily depend on whether good Y is a normal or inferior good.

​Suppose the Price of Good X Increases and Consumers Purchase

Suppose the Price of Good X Increases and Consumers Purchase