Suppose Ming spends his entire income on two goods, X and Y, has "standard-looking" indifference curves, and chooses C as his initial optimal consumption bundle. Now suppose the price of X decreases while Ming's income and the price of Y stay unchanged. At his new optimal consumption bundle, Ming consumes more X and more Y than he consumed at C. Given this information, which of the following statements must be true? O Xis a normal good. O Xif an inferior good. O Y is a normal good. O Yis an inferior good. O The substitution effect dominates the income effect for Y.

Suppose Ming spends his entire income on two goods, X and Y, has "standard-looking" indifference curves, and chooses C as his initial optimal consumption bundle. Now suppose the price of X decreases while Ming's income and the price of Y stay unchanged. At his new optimal consumption bundle, Ming consumes more X and more Y than he consumed at C. Given this information, which of the following statements must be true? O Xis a normal good. O Xif an inferior good. O Y is a normal good. O Yis an inferior good. O The substitution effect dominates the income effect for Y.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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