Principles of Economics, 7th Edition (MindTap Course List)
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 21, Problem 4PA

Subpart (a):

To determine

The inferior and normal goods of consumption by an individual.

Subpart (b):

To determine

The inferior and normal goods of consumption by an individual.

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Yakov consumes only cheese and crackers. Cheese and crackers    both be inferior goods for Yakov.   Suppose that cheese is a normal good for Yakov while crackers are an inferior good. If the price of cheese falls, Yakov's consumption of crackers    and his consumption of cheese    .
Peanut butter and jam can be either substitutes or it can be compliments. Caitlin likes peanut butter and she likes jam, but you do not know if Caitlin regards these products as substitutes or as compliments. Which of the following is true?    A. If the price of peanut butter decreases and the quantity of jam Caitlin demanded increases, then Caitlin regards it as substitutes.  B. If the price of jam increases and the quantity of peanut butter Caitlin demanded increases, then Caitlin regards it as compliments.  C. If the price of peanut butter increases and the quantity of jam Caitlin demanded increases, then Caitlin regards it as substitutes.  D. If the price of jam decreases and the quantity of peanut butter Caitlin demanded decreases, then Caitlin regards it as compliments.  E. If the price of peanut butter increases and the quantity of jam Caitlin demanded stays the same, Caitlin regards it as compliments.
If the consumer is consuming exactly two goods, and she is always spending all of her money, can both of them be inferior goods?
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