If two goods are perfect complements, then which of the following is correctE Goods can be normal or inferior Substitution effect is positive on the good whose price goes down Total effect exceeds Income effect Substitution effect is always zero

Q: Sally eats at the local burger restaurant. Suddenly the restaurant lowers its prices. A - In…

A: Answer:-  A) You can't do it. Because Sally frequents the burger joint, lower burger prices imply…

Q: Goods 1 and 2 are perfect complements, and a consumer always consumes them in the ratio of 2 units…

A: Perfect complements are a pair of goods or services that are typically consumed together in fixed…

Q: Suppose two goods coffee and cream provide the consumer with utility but only if they are consumed…

A: If there is an increase in price of Coffee, then it will lead to an income effect but no…

Q: If a good is a Normal Good and its price decreases, what are the directions of the Substitution…

A: Answer- (A)   That is both increases

Q: True or False? Two normal goods cannot be substitutes for each other. Illustrate.

A: A normal good is one that has an increase in demand as a result of rising consumer income.  Income…

Q: Which of the following is incorrect? O Income effect can be zero If consumer consumes two goods,…

A: Answer: A Giffen good is a good that has a positive relationship with price. It means when the price…

Q: Normal goods cannot be Giffen goods because their income effect is smaller than their substitution…

A: For the normal goods, both the income and the substitution effect both work in the same direction.…

Q: Suppose there are two goods, x and y. If one good has a negative price, and the other good has a…

A: The objective of the question is to determine whether the slope of the budget constraint will be…

Q: When there is a change in price, there is an income effect and a substitution effect. Which is…

A: The income effect is that the change within the consumption of products by consumers supported their…

Q: The marginal utility for the third unit of X is 60 utils, and the marginal utility for the fourth…

A: The law of diminishing marginal utility states that  as consumer consumes more and more of a good,…

Q: If the consumer is consuming exactly two goods, and she is always spending all of her money, can…

A: We will use microeconomic concepts such as monotonicity, substitution effects, normal goods and…

Q: Coke and Pepsi are perfect substitutes. Initially the price of Coke is higher than the price of…

A: The perfect substitutes are the goods which cannot be used simultaneously and can only be used in…

Q: Suppose that beer and pretzels are unrelated goods (neither complements nor substitutes). Which of…

A: Basics:- Substitution effect occurs when two goods can replace consumption of each other. Example:-…

Q: Suppose a consumer has preferences between two goods that are perfect substitutes. Can you change…

A: In economics, the price of a good and the quantity consumed are inversely related. When the price…

Q: Substitutions for goods cannot always be made. Which of the following is an example of a good that…

A: The question is asking for an example of a good that cannot be substituted with another good. In…

Q: Two students, Nick and Sofia, are discussing normal and inferior goods. Nick says that if Frodo buys…

A: According to the question, Nick and Sofia, two students, are debating the differences between…

Q: Arya only consumes two goods: X and Y. When the price of X changes, the income effect and the…

A: For normal goods : Income effect says that decrease in price of one good increases quantity demanded…

Q: The figure below shows a consumer maximizing utility at two different prices (the left panel) and…

A: Hicksian Substitution effect: Under this case some changes in income is being provided to the…

Q: explain how utility analysis leads to the law of demand.

A: Demand is a economic rule alluding to a buyer's wants for a specific item or administration. Utility…

Q: When the price of raspberries increases, consumers may switch to strawberries or blueberries. What…

A: Demand is determined by the various factors and one of them is price of related goods . And related…

Q: If consumers buy less of a commodity when their incomes rise, this commodity is  ( an inferior good…

A: In the market, the change in the consumers buying decision depends upon two types of price effect,…

Q: Consider the increase in the price of a can of soda and assume that soda is a normal good. Describe…

A: Normal goods are those goods that are positively / directly related to the income level of…

Q: ll there

A: Giffen good is a product which is low income and non-luxury for which demand tends to increase with…