Good Y is a substitute of good X. The price of Y falls. Explain the chain of effects of this change in the market of X.

Good Y is a substitute of good X. The price of Y falls. Explain the ch

1.	Good Y is a substitute of good X. The price of Y falls. Explain the chain of effects of this change in the market of X.
Answer» Solution :A fall in PRICE of Y leads to a decrease in demand for X. This decrease in demand leads to leftwards shift in the demand CURVE, CAUSING a higher competition among the sellers due to decreased demand. As a result, the sellers reduce the prices in order to sell their EXISTING stock. This fall in prices leads to an increase in quantity demanded and a fall in quantity supplied until a new equlibrium is achieved where quantity demanded equals the quantity supplied.