Assume the demand function for good X can be written as
Qd = 80 - 3Px + 2Py + 10I
where Px = the price of X,
Py = the price of good Y,and
I = Consumer income.
This equation implies that X and Y are substitutes.

Question

Quizplus · Accepted Answer

The positive coefficient of Py in the demand function indicates that as the price of good Y increases, the quantity demanded of good X also increases, suggesting that consumers may switch from Y to X, which is characteristic of substitute goods.

Assume the Demand Function for Good X Can Be Written