Exhibit 5-9 Supply and demand curves for good X

-As shown in Exhibit 5-9, assuming goods X and Y are substitutes, an increase in the price of Y, other factors held constant, could move the equilibrium from point E to point:
A) A.
B) B.
C) C.
D) D.

Question

Exhibit 5-9 Supply and demand curves for good X
​ 
-As shown in Exhibit 5-9, assuming goods X and Y are substitutes, an increase in the price of Y, other factors held constant, could move the equilibrium from point E to point: ​
A) A. 
B) B. 
C) C. 
D) D.

Quizplus · Accepted Answer

If the price of Y increases (a substitute good), the demand for X will likely increase, causing a shift in the demand curve to the right. As a result, the equilibrium will move from point E to a point with a higher quantity demanded and a higher price, which is point C.

Exhibit 5-9 Supply and Demand Curves for Good X