Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 16

The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corp., 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 increase?
b. How will the demand for good Y change if consumer incomes decrease?
c. How will the demand for good X change if the price of good Y decrease?
d. Is good Y a lower-quality product than good X ? Explain.