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Question
Good X and Good Y are substitute goods. If price of Good X increases, discuss briefly its likely impact on the demand for Good Y.
Solution
Substitute goods refer to those goods that are consumed in place of each other. For example Tea and coffee, etc. In the given question, two goods X and Y are substitute goods. If the price of Good X increases, the demand for Good Y will increase. If the price of the X (substitute good) rises, then demand for X will fall. As X and Y are substitute goods, so the demand for Y will increase since it is a cheaper good now. This shifts the initial demand curve for Y parallelly rightwards.
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