Arya only consumes two goods: X and Y. When the price of X changes, the income effect and the substitution effect for X move in opposite directions. In addition, the income effect for X dominates the substitution effect. X must be: a) a Giffen good for Arya. b) an inferior good for Arya. c) a normal good for Arya. O d) perfect substitutes for Arya. O e) Both a and b are true.
Arya only consumes two goods: X and Y. When the price of X changes, the income effect and the substitution effect for X move in opposite directions. In addition, the income effect for X dominates the substitution effect. X must be: a) a Giffen good for Arya. b) an inferior good for Arya. c) a normal good for Arya. O d) perfect substitutes for Arya. O e) Both a and b are true.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 5CQQ
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![Arya only consumes two goods: X and Y. When the price of X changes, the income
effect and the substitution effect for X move in opposite directions. In addition, the
income effect for X dominates the substitution effect. X must be:
a) a Giffen good for Arya.
b) an inferior good for Arya.
c) a normal good for Arya.
O d) perfect substitutes for Arya.
O e) Both a and b are true.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F39e0df17-ad8c-4199-aeec-4dbcd0a552ce%2Fb7bea1f5-e8e9-482b-9d19-52f293cf0b22%2Ftl6ds1h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Arya only consumes two goods: X and Y. When the price of X changes, the income
effect and the substitution effect for X move in opposite directions. In addition, the
income effect for X dominates the substitution effect. X must be:
a) a Giffen good for Arya.
b) an inferior good for Arya.
c) a normal good for Arya.
O d) perfect substitutes for Arya.
O e) Both a and b are true.
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