Suppose there are only two normal goods in the economy, X and Y. If price of good X increases, which would be the correct statement from below? (a) Demand for good X decreases and demand for Y indeterminate. (b) Demand for good X decreases and demand for
In general, if the price of a normal good X increases, its demand decreases as it becomes more expensive, according to the law of demand. The effect on good Y is indeterminate without additional information about the relationship between X and Y.