Answer to Question #283226 in Economics for mark

Question

If you work as an advisor for firm A (Good X) and firm B (Good Y), when the income of consumer increase during the economic boom, what is the best advice you should give to the firm owner for good X and good Y as to what to do with the volume of production - should the firm raise their volume even more or just a little? Why

Answer 1

In the case of consumer's income growth during the economic boom product demand will grow. Therefore, the manufacturing of both good X and good Y should be increased.