Economics
WAEC 2008
If good P and Q are jointly demanded, an increase in the price of P will likely
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A.
leave the demand for Q constant but reduce the quantity demanded of P
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B.
reduce the quantity of P but increase the Price of Q
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C.
Increase the quantity supplied of Q
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D.
decrease the quantity demanded of Q
Correct Answer: Option D
Explanation
Joint demand is when you need two goods because they work together. If two goods are in joint demand they will have a high and negative cross elasticity of demand. This means a rise in the price of one will lead to a decrease in the demand for the other. Therefore option D is correct. An increase in the price of P, will lead to a decrease in the quantity demanded of Q.
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