Elasticity effects on demand for substitute goods Steps:

• Income rises: X is inferior (income elasticity -0.6 < 0), so quantity demanded of X falls; Y is normal (income elasticity +1.8 > 0), so quantity demanded of Y rises.
• Price of X rises: Own-price effect decreases quantity demanded of X (law of demand assumes negative elasticity).
• Price of X rises: Positive cross elasticity (+1.8) means X and Y are substitutes, so quantity demanded of Y rises.
• Overall: Quantity of X falls from both changes; quantity of Y rises from both changes.

Why B is correct:

• B accurately reflects the combined fall in quantity of X (inferior good, higher price) and rise in quantity of Y (normal good, substitute for X).

Why the others are wrong:

• A: Incorrect on Y; quantity rises due to normal good status and substitution effect.
• C: Incorrect on X; quantity falls due to income (inferior) and own-price effects.
• D: Incorrect on both; X falls and Y rises.

Final answer: B