Suppose that a consumer's preferences are well behaved in that properties 4-1 - 4-4 are satisfied and the initial equilibrium consumption bundle consists of 10 units of X and 25 units of Y.If P_Y increases such that the new equilibrium consumption bundle is 15 units of X and 10 units of Y, then goods X and Y are A)complements. B)substitutes. C)normal goods. D)unrelated.

Question

Quizplus · Accepted Answer

Since the increase in the price of good Y leads to a decrease in the quantity demanded of good Y and an increase in the quantity demanded of good X, goods X and Y are substitutes.

Suppose That a Consumer's Preferences Are Well Behaved in That