Assume the demand function for good X can be written as Qd = 80 – 3Px
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. According to this equation:
A) a rise in the price of Y would cause the demand for X to decrease.
B) X and Y are complements
C) X is an inferior good.
D) X and Y are substitutes.
ANSWER
D
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