Item5

10points

Item 5Problem 02-01The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corporation, makes a substitute good that it markets under the name "Y." Good Y is an inferior good. a. How will the demand for good X change if consumer incomes decrease? multiple choice 1

• It will increase.
• It will stay the same.
• It will decrease.

b. How will the demand for good Y change if consumer incomes increase? multiple choice 2

• It will increase.
• It will decrease.
• It will stay the same.

c. How will the demand for good X change if the price of good Y increases? multiple choice 3

• It will decrease.
• It will increase.
• It will stay the same.

d. Is good Y a lower-quality product than good X? multiple choice 4

• No - good Y is a product of identical quality to good X.
• Not necessarily - it could be higher or lower quality.
• No - good Y is a higher quality product than good X.
• Yes - good Y is a lower quality product than good X.