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Question
If X and Y are complementary goods, a rise in the price of Y will cause the demand curve of X to ______.
Options
Shift to the left
Shift to the right
Extend
Contract
Solution
If X and Y are complementary goods, a rise in the price of Y will cause the demand curve of X to Shift to the left.
Explanation:
If X and Y are complementary goods, a rise in the price of Y will decrease the demand for Y, and consequently, the demand for X will also decrease because the two goods are used together. This decrease in demand for X will cause the demand curve of X to shift to the left.
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