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

Question

Quizplus · Accepted Answer

A decrease in the price of product X (an input for product Y) would likely lower the production costs for product Y, potentially leading to an increase in the supply of product Y. Since product Y is a substitute for product Z, an increase in the supply (and potentially a decrease in the price) of product Y could make consumers switch from product Z to product Y, thereby decreasing the demand for product Z.

Suppose Product X Is an Input in the Production of Product