Suppose product X is an input in the production of product Y. Product Y in turn is a substitute for product Z. An increase in the price of X can be expected to

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If the price of X increases, the production cost of Y goes up. To compensate for the increased cost of production, the price of Y increases, which makes it less attractive to consumers. As a result, consumers tend to shift to a substitute product, which is Z in this case, leading to an increase in the demand for Z.

Suppose Product X Is an Input in the Production of Product