sider the diagram below showing a consumer's choice of goods (Trainers and Electricity), following a rise in the price of Trainers. Identify which statement about the diagram is e. ectricity BL BL B -1C₁ A X3 X₂ X₁ 10₂ -IC₁ BL₁₂ Trainers The original consumption bundle is given by point C; the new consumption bundle is given by point A; BL3 represents the compensated budget line, using the Slutsky substitution effect: Trainers are a Giffen good. The original consumption bundle is given by point C; the new consumption bundle is given by point A; BL3 represents the compensated budget line, using the Slutsky substitution effect: Trainers are a normal good. The original consumption bundle is given by point A; the new consumption bundle is given by point C; BL3 represents the compensated budget line, using the Hicksian substitution effect; Trainers are a Giffen good. The original consumption bundle is given by point A; the new consumption bundle is given by point C: BL3 represents the compensated budget line, using the Hicksian substitution effect, Trainers are an inferior (non-Giffen) good. The original consumption bundle is given by point A; the new consumption bundle is given by point C; BL3 represents the compensated budget line, using the Slutsky substitution effect; Trainers are a Normal good. ON
sider the diagram below showing a consumer's choice of goods (Trainers and Electricity), following a rise in the price of Trainers. Identify which statement about the diagram is e. ectricity BL BL B -1C₁ A X3 X₂ X₁ 10₂ -IC₁ BL₁₂ Trainers The original consumption bundle is given by point C; the new consumption bundle is given by point A; BL3 represents the compensated budget line, using the Slutsky substitution effect: Trainers are a Giffen good. The original consumption bundle is given by point C; the new consumption bundle is given by point A; BL3 represents the compensated budget line, using the Slutsky substitution effect: Trainers are a normal good. The original consumption bundle is given by point A; the new consumption bundle is given by point C; BL3 represents the compensated budget line, using the Hicksian substitution effect; Trainers are a Giffen good. The original consumption bundle is given by point A; the new consumption bundle is given by point C: BL3 represents the compensated budget line, using the Hicksian substitution effect, Trainers are an inferior (non-Giffen) good. The original consumption bundle is given by point A; the new consumption bundle is given by point C; BL3 represents the compensated budget line, using the Slutsky substitution effect; Trainers are a Normal good. ON
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:Consider the diagram below showing a consumer's choice of goods (Trainers and Electricity), following a rise in the price of Trainers. Identify which statement about the diagram is
true.
Electricity
BL3
BLZ C
B
IC3
X3 X₂
A
X₁
IC₂
-IC₁
BL₁
Trainers
O The original consumption bundle is given by point C; the new consumption bundle is given by point A; BL3 represents the compensated budget line, using the Slutsky substitution effect;
Trainers are a Giffen good.
The original consumption bundle is given by point C; the new consumption bundle is given by point A; BL3 represents the compensated budget line, using the Slutsky substitution effect;
Trainers are a normal good.
The original consumption bundle is given by point A; the new consumption bundle is given by point C; BL3 represents the compensated budget line, using the Hicksian substitution effect;
Trainers are a Giffen good.
The original consumption bundle is given by point A; the new consumption bundle is given by point C; BL3 represents the compensated budget line, using the Hicksian substitution effect;
Trainers are an inferior (non-Giffen) good.
The original consumption bundle is given by point A; the new consumption bundle is given by point C; BL3 represents the compensated budget line, using the Slutsky substitution effect;
Trainers are a Normal good.
O No answer.
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