Suppose an excise tax is imposed on product X.We expect this tax to:

A) increase the demand for complementary good Y and decrease the demand for substitute product Z.
B) decrease the demand for complementary good Y and increase the demand for substitute product Z.
C) increase the demands for both complementary good Y and substitute product Z.
D) decrease the demands for both complementary good Y and substitute product Z.

An excise tax is a tax on a specific good or service, which would increase the price of the good. As a result, consumers will likely decrease their demand for the taxed good (product X) and look for substitutes that are cheaper, which would increase the demand for substitute product Z. Additionally, consumers may also decrease their demand for complementary good Y as they are less likely to purchase product X, leading to a decrease in demand for complementary good Y. Therefore, the best choice is B, which states that the tax will decrease the demand for complementary good Y and increase the demand for substitute product Z.