Answer to Question #89581 in Microeconomics for Areej

Question

What will be the shape of the price consumption curve if X and Y are substitute goods. What can you inter about the own and cross price elasticities of demand? Explain using graphs.

Answer 1

The price consumption curve is downward-sloping if X and Y are substitute goods. The demand for good X should be elastic and cross price elasticity of demand between goods X and Y should be positive.