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What is the relation between good X and good Y in each case, if with fall in the price of X demand for good Y (i) rises and (ii) falls ? Give reason. |
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Answer» Solution :(i) The two goods are complementary goods SINCE a fall in PRICE of X LEADS to a rise in demand of Y or there is negative RELATION between price of one good and the demand for another. (ii) The two goods are substitute goods as a fall in price of X leads to a fall in demand for Y or there is a positive relationship between price of X and demand for Y, which is the PROPERTY of substitute goods. |
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