Part 1 of a 3-part question: Suppose Ming spends his entire income on two goods, X and Y, has "standard-looking" indiffe

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Part 1 Of A 3 Part Question Suppose Ming Spends His Entire Income On Two Goods X And Y Has Standard Looking Indiffe 1 (37.97 KiB) Viewed 27 times

Part 1 Of A 3 Part Question Suppose Ming Spends His Entire Income On Two Goods X And Y Has Standard Looking Indiffe 2 (42.95 KiB) Viewed 27 times

Part 1 Of A 3 Part Question Suppose Ming Spends His Entire Income On Two Goods X And Y Has Standard Looking Indiffe 3 (27.14 KiB) Viewed 27 times

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 the following statements must be true? o X is a normal good. o Xif an inferior good. O Y is a normal good O Y is an inferior good. The substitution effect dominates the income effect for Y.
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 The income effect dominates the substitution effect for X The income effect dominates the substitution effect for Y. Each of the preceding statements must be true.
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 increases, Ming's demand curve for X shifts out when the price of increases, Ming's demand curve for X shifts out. O Ming's demand curve for X is a horizontal line. O Ming's demand curve for X is a vertical line.