- 4 Pts Question 5 Part 1 Of A 3 Part Question Suppose Ming Spends His Entire Income On Two Goods X And Y Has Standard 1 (174.63 KiB) Viewed 33 times
- 4 Pts Question 5 Part 1 Of A 3 Part Question Suppose Ming Spends His Entire Income On Two Goods X And Y Has Standard 2 (189.01 KiB) Viewed 33 times
- 4 Pts Question 5 Part 1 Of A 3 Part Question Suppose Ming Spends His Entire Income On Two Goods X And Y Has Standard 3 (122.38 KiB) Viewed 33 times
4 pts Question 5 Part 1 of a 3-part question: Suppose Ming spends his entire income on two goods, X and Y, has “standard-looking” indifference curves, and chooses C* as his initial optimal consumption bundle. Now suppose the price of X decreases while Ming's income and the price of Y stay unchanged. At his new optimal consumption bundle, Ming consumes more X and more Y than he consumed at C*. Given this information, which of following statements must be true? O X is a normal good. O X if an inferior good. O Y is a normal good. O Y is an inferior good. The substitution effect dominates the income effect for Y.
3 pts Question 6 Part 2 of a 3-part question: Following up on the preceding question, instead of assuming Ming has “standard-looking indifference curves," assume that he views X and Y as perfect complements. Everything else in the preceding question stays the same, including the fact that Ming consumes more X and more Y when the price of X decreases and everything else stays the same. Given this new information about Ming's preferences, which of the following statements must be true? O X is a normal good. O Y is a normal good. O The income effect dominates the substitution effect for X. O The income effect dominates the substitution effect for Y. Each of the preceding statements must be true.
3 pts Question 7 Part 3 of a 3-part question: From the information given in the preceding question (in which Ming views X and Y as perfect complements), we know that O when the price of Y increases, Ming's demand curve for X shifts in. when the price of Y increases, Ming's demand curve for X shifts out. when the price of X increases, Ming's demand curve for X shifts out. Ming's demand curve for X is a horizontal line. O Ming's demand curve for X is a vertical line.