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

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
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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please answer the (d) question only. Thanks!

3. Based on each scenario in this question, indicate whether the following statements is true or false, and briefly explain your reasoning. You may also want to use a graph in your explanation if you think it's necessary. a) Mike makes $500 per week and spends all her income on books and tea. Books cost $25 each, and Mike buys 16 each week. Tea costs $5 per cup, and Mike buys 20 cups. When Mike's income falls to $450 per week, he cuts his consumption of books by 3 books and purchases 5 more cups of tea. Based on Mike's consumption behaviors, books are an inferior good and Tea is a normal good. b) Lucy consumes food and clothing. For incomes near her current income, her income expansion path is negatively sloped. Assume that food is measured along the horizontal axis 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 income and negatively sloped for another region.
Transcribed Image Text:3. Based on each scenario in this question, indicate whether the following statements is true or false, and briefly explain your reasoning. You may also want to use a graph in your explanation if you think it's necessary. a) Mike makes $500 per week and spends all her income on books and tea. Books cost $25 each, and Mike buys 16 each week. Tea costs $5 per cup, and Mike buys 20 cups. When Mike's income falls to $450 per week, he cuts his consumption of books by 3 books and purchases 5 more cups of tea. Based on Mike's consumption behaviors, books are an inferior good and Tea is a normal good. b) Lucy consumes food and clothing. For incomes near her current income, her income expansion path is negatively sloped. Assume that food is measured along the horizontal axis 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 income and negatively sloped for another region.
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