Goods X and Y are substitutes. If the price of good Y falls, the marginal revenue product of good X

Question

Quizplus · Accepted Answer

If the price of a substitute good (good Y) falls, consumers are likely to switch from buying good X to buying good Y. This means that the demand for good X will decrease, and therefore the marginal revenue product of good X will also decrease. This can be represented as a shift in the demand curve for good X to the left, resulting in a decrease in marginal revenue product. Therefore, the correct answer is D, as the marginal revenue product of good X will shift in.

Goods X and Y Are Substitutes