Suppose that X and Y are substitutes. If the price of Y increases, how will this change the market equilibrium for X?
A) Equilibrium price and quantity both decline.
B) Equilibrium price and quantity both rise.
C) Equilibrium price declines, and equilibrium quantity rises.
D) Equilibrium price rises, and equilibrium quantity falls.

Question

Suppose that X and Y are substitutes. If the price of Y increases, how will this change the market equilibrium for X? ​
A) ​Equilibrium price and quantity both decline.
B) ​Equilibrium price and quantity both rise.
C) ​Equilibrium price declines, and equilibrium quantity rises.
D) Equilibrium price rises, and equilibrium quantity falls.​

Quizplus · Accepted Answer

When the price of substitute good Y increases, consumers will switch to good X, increasing its demand, which raises both the equilibrium price and quantity of X.

Suppose That X and Y Are Substitutes