please answer the (d) question only. Thanks! 3. Based on each scenario in this question, indicate whether the following statements is true orfalse, and briefly explain your reasoning. You may also want to use a graph in your explanationif you think it's necessary.a) Mike makes $500 per week and spends all her income on books and tea. Books cost $25each, and Mike buys 16 each week. Tea costs $5 per cup, and Mike buys 20 cups. WhenMike's income falls to $450 per week, he cuts his consumption of books by 3 books andpurchases 5 more cups of tea. Based on Mike's consumption behaviors, books are aninferior good and Tea is a normal good.b) Lucy consumes food and clothing. For incomes near her current income, her incomeexpansion path is negatively sloped. Assume that food is measured along the horizontalaxis and clothing is measured along the vertical axis. Therefore, at current income levels,both food and clothing must be inferior good.c) For any normal goods, the income and substitution effects work in the same direction.d) It is impossible for an Engel curve to be positively sloped for a certain region of incomeand negatively sloped for another region.

d) An Engel curve is a graph representation that depicts the association between a good's demand and…

Answered: d) It is impossible for an Engel curve…

d) It is impossible for an Engel curve to be positively sloped for a certain region of income and negatively sloped for another region.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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