Suppose there are two goods X and Y in the market that are used as substitutes. If consumers' preferences shift in favour of good Y:
A) the demand curve for good X shifts to the right.
B) the equilibrium quantity of good X increases if supply is unchanged
C) the equilibrium price of good X decreases if supply is unchanged.
D) the equilibrium price of good X increases if supply is increased.

Question

Quizplus · Accepted Answer

When consumers' preferences shift in favor of good Y, the demand for its substitute, good X, decreases. This leads to a decrease in the equilibrium price of good X if the supply remains unchanged, as there is less demand for it.

Suppose There Are Two Goods X and Y in the Market