3. A person who consumes wine and cheese gets a raise, so his income increases from $3000 to$4000. Show what happens if both wine and cheese are normal goods. Now show what happensif cheese is an inferior good.

Inferior goods are those goods, whose demand will decrease, when the income of the consumer…

Answered: 3. A person who consumes wine and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

10. What happens to the demand curve for an inferior good if a consumer's income increases? Show me using a diagram, please.
6. Part a and Part B
The law of diminishing marginal utility helps to explain the direct relationship between price and quantity supplied. a. True b. False
3. As coffee becomes more expensive, Jamal starts drinking tea, therefore quantity demanded for coffee decreases. This is called a. the income effect. b. the change in equilibrium. c. the substitution effect. d. a shift in the demand curve.
Figure 4-6Refer to Figure 4-6. The movement from D’ to D could be caused by a. an increase in the price of a complement. b. a decrease in income, assuming the good is inferior. c. a decrease in price. d. buyers expecting the price of the good to fall in the near future.
The diagram shows Sam's budget line. Which of the following would result in Sam's budget line shifting leftward and not changing its slope?
For most goods if a consumer's income increases his demand for the goods will do what?
3. If the demand for a product is perfectly price inelastic, what does the corresponding price consumption curve look like? Draw a graph to show the price consumption curve.
Question 3
1. Which of the following is NOT true of a demand curve? a. It has negative slope. b. It shows the amount consumers are willing and able to purchase at various prices, holding other factors constant. c. It relates the price of an item to the quantity demanded of that item. d. It shows how an increase in price leads to an increase in quantity demanded of a good.
Suppose that a decrease in the price of X results in less of good Y sold. What are X and Y called? A. substitute goods B. complementary goods C. normal goods D. inferior goods

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3. A person who consumes wine and cheese gets a raise, so his income increases from $3000 to $4000. Show what happens if both wine and cheese are normal goods. Now show what happens if cheese is an inferior good.