Suppose a consumer spends all of their money on good X and good Z. When the price of good Z decreases, the A. substitution effect on good Z is positive, and the income effect on good Z is positive. B. substitution effect on good Z is ambiguous, and the income effect on good Z is ambiguous. C. substitution effect on good Z is positive, and the income effect on good Z is ambiguous. D. substitution effect on good Z is ambiguous, and the income effect on good Z is positive. E. None of the above.

Suppose a consumer spends all of their money on good X and good Z. When the price of good Z decreases, the A. substitution effect on good Z is positive, and the income effect on good Z is positive. B. substitution effect on good Z is ambiguous, and the income effect on good Z is ambiguous. C. substitution effect on good Z is positive, and the income effect on good Z is ambiguous. D. substitution effect on good Z is ambiguous, and the income effect on good Z is positive. E. None of the above.

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 5CQQ

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