Assuming that Good X and Good Y are close substitutes of each other,a per-unit sales tax on Good Y will:
A)increase the demand for Good X.
B)increase the demand for Good Y.
C)decrease the supply of Good X.
D)decrease the demand for Good X.

Question

Quizplus · Accepted Answer

If Good X and Good Y are close substitutes, then a per-unit sales tax on Good Y will make it relatively more expensive compared to Good X. As a result, consumers are likely to switch to Good X, increasing the demand for it.

Assuming That Good X and Good Y Are Close Substitutes