If Goods X and Y are substitutes in production, if the price of Good X decreases, this will cause a _________ the supply curve for Good X and a _________the supply curve for Good Y.

Question

If Goods X and Y are substitutes in production, if the price of Good X decreases, this will cause a _________ the supply curve for Good X and a  _________the supply curve for Good Y.

Quizplus · Accepted Answer

If a decrease in the price of Good X causes a movement along the supply curve for Good X, then the quantity supplied of Good X will increase. This will affect the quantity of Good Y that producers are willing to supply. If Good X and Y are substitutes in production, then producers can switch to producing Good X instead of Good Y if the price of Good X becomes relatively more attractive. As a result, the supply curve for Good Y will shift to the left, since producers will be willing to supply less of Good Y at any given price. Therefore, a decrease in the price of Good X will cause a movement along the supply curve for Good X and a shift in the supply curve for Good Y.

If Goods X and Y Are Substitutes in Production, If