Mark the changes in the market equilibrium


Problem: Suppose that goods X & Y are INFERIOR goods (however, not GIFFEN goods) and are complements of one another. Assume that the government imposes new restrictions on the production of X (only) for the purpose of limiting environmental pollution. Further suppose that a new product, Z, which is essentially a substitute for X (but NOT for Y) creates a sensation and becomes an overnight fad. Show graphically and explain how these two effects will impact the market for X and the market for Y. (hint: you must draw two graphs, one for the market for X and the other for the market for Y. Clearly indicate all shifts if any, and clearly mark the changes in the market equilibrium).

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Marketing Management: Mark the changes in the market equilibrium
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