Goods 1 and 2 are perfect complements, and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1. If a consumer has an income of $720 and if the price of good 2 changes from $8 to $9, while the price of good 1 stays at $1, then the income effect of the price change is exactly twice as strong as the substitution effect. is 8 times as strong as the substitution effect. accounts for the entire change in demand. is 9 times as strong as the substitution effect. does not change demand for good 1

Goods 1 and 2 are perfect complements, and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1. If a consumer has an income of $720 and if the price of good 2 changes from $8 to $9, while the price of good 1 stays at $1, then the income effect of the price change is exactly twice as strong as the substitution effect. is 8 times as strong as the substitution effect. accounts for the entire change in demand. is 9 times as strong as the substitution effect. does not change demand for good 1

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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