Purchase Solution

Comparative Statics - Supply & Demand Curves

Not what you're looking for?

Ask Custom Question

Question 1
The X-corporation produces a good (called X) that is a normal good. Its competitor, Y-Corpor., 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 decrease?
Hint: Draw the original values for the demand and supply curve and then show how a decrease in income will demand. Label your curves and points, following the use of comparative statics given on page 63.
b. How will the demand for Good Y change if consumer incomes increase?
Hint: Again draw the original curves and show how the relevant curve will be shifted. Label accordingly.
c. How will the demand for good X change if the price of good Y increases?
Hint: Use comparative statics as explained above.
d. Is good Y a lower-quality product than good X? Explain

Purchase this Solution

Solution Summary

Comparative statics is used to explain how demand changes. Graphs are provided. 255 words and attached as PDFs.

Solution Preview

A pdf file with the curves is shown for parts a, b and c is attached.

a) A normal good is a good whereby a decrease in income leads to a decrease in the demand of the good. Since X is a normal good, demand for good X will decrease if consumer incomes decrease, i.e. the demand curve for X shifts LEFT.

As an example, you can think of good ...

Solution provided by:
  • MSc, California State Polytechnic University, Pomona
  • MBA, University of California, Riverside
  • BSc, California State Polytechnic University, Pomona
  • BSc, California State Polytechnic University, Pomona
Recent Feedback
  • "Excellent work. Well explained."
  • "Can you kindly take a look at 647530 and 647531. Thanks"
  • "Thank you so very much. This is very well done and presented. I certainly appreciate your hard work. I am a novice at statistics and it is nice to know there are those out there who really do understand. Thanks again for an excellent posting. SPJ"
  • "GREAT JOB!!!"
  • "Hello, thank you for your answer for my probability question. However, I think you interpreted the second and third question differently than was meant, as the assumption still stands that a person still independently ranks the n options first. The probability I am after is the probability that this independently determined ranking then is equal to one of the p fixed rankings. Similarly for the third question, where the x people choose their ranking independently, and then I want the probability that for x people this is equal to one particular ranking. I was wondering if you could help me with this. "
Purchase this Solution

Free BrainMass Quizzes
Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations


This tests some key elements of major motivation theories.