Answer to Question #205000 in Economics for Nonhlanhla

Question

The prices of both goods X and Y increase by 8%. This change in price results in a 4% decrease in the quantity demanded of good X, and a 25% decrease in the quantity demanded of good Y. This difference may be because....

a) good X is an inferior good, and good Y is a normal good.

b) good Y is an essential good, while good X is an inferior good.

c) good X is an essential good, while good Y is a luxury good.

d) good X is a luxury good, while good Y is an essential good.

Answer 1

c) good X is an essential good, while good Y is a luxury good