(a) To find the prices of good X and Y.

Question

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Answer 1

Question

Chapter 4, Problem 6CACQ

To determine

(a)

To find the prices of good X and Y.

Expert Solution

Explanation of Solution

The equation of Initial budget line is as follows:

$400=$100X+$200Y

The Standard Equation of budget line is as follows:

M=PXX+PYYWhere, M is the income of consumerPX is the price of good XPY is the price of good Y

On comparing with the standard equation of budget line price of good X is $100 and good Y is $200.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(b)

To find the number of units of good Y that can be purchased at point A.

Expert Solution

Explanation of Solution

The number of units of good Y that can be purchased at point A is calculated as follows:

$400=$100X+$200YPut X=0$400=$100×0+$200Y$400=0+$200Y$200Y=$400Y=2units

Therefore, the number of units of good Y produced at point A is 2 units.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(c)

To find the number of units of good X that can be purchased at point E.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point E is calculated as follows:

$400=$100X+$200YPut Y=0$400=$100X+$200×0$400=$100X+0X=4units

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(d)

To find the number of units of good X that can be purchased at point B.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point B is calculated as follows:

At point B consumer spent his entire nominal amount of money on good Y and buy 2 units of good Y and using $100 gift certificate consumer can consume 1 unit of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(e)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point F is calculated as follows:

At point consumer can consume 5 units of good X as buy spending his $400 income and additional $100 gift certificate, he is spending total of $500 on consumption of good X and consuming 5 units of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(f)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

Based on preferences consumer can rank his preference A, B, C and D.

Consumer will rank his preference as follow:

D>B>C>AD(lies on IC2)>B(lies between IC1 and IC2)>C(lies on IC2)>A(lies below IC1)

IC₂ is the highest IC curve and gives more utility than IC₁.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(g)

To analyze whether good X is a normal good or inferior good.

Expert Solution

Explanation of Solution

X is an inferior good because after getting gift card, he can spend gift card only on good X. Consumer is not splitting gift card on both the goods and using it to buy only X, which explains inferior nature of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

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Joy's Frozen Yogurt shops have enjoyed rapid growth in northeastern states in recent years. From the analysis of Joy's various outlets, it was found that the demand curve follows this pattern: Q=200-300P+1201 +657-250A +400A; where Q = number of cups served per week P = average price paid for each cup I = per capita income in the given market (thousands) Taverage outdoor temperature A competition's monthly advertising expenditures (thousands) = A; = Joy's own monthly advertising expenditures (thousands) One of the outlets has the following conditions: P = 1.50, I = 10, T = 60, A₁ = 15, A; = 10 1. Estimate the number of cups served per week by this outlet. Also determine the outlet's demand curve. 2. What would be the effect of a $5,000 increase in the competitor's advertising expenditure? Illustrate the effect on the outlet's demand curve. 3. What would Joy's advertising expenditure have to be to counteract this effect?

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Answer 2

Question

Chapter 4, Problem 6CACQ

To determine

(a)

To find the prices of good X and Y.

Expert Solution

Explanation of Solution

The equation of Initial budget line is as follows:

$400=$100X+$200Y

The Standard Equation of budget line is as follows:

M=PXX+PYYWhere, M is the income of consumerPX is the price of good XPY is the price of good Y

On comparing with the standard equation of budget line price of good X is $100 and good Y is $200.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(b)

To find the number of units of good Y that can be purchased at point A.

Expert Solution

Explanation of Solution

The number of units of good Y that can be purchased at point A is calculated as follows:

$400=$100X+$200YPut X=0$400=$100×0+$200Y$400=0+$200Y$200Y=$400Y=2units

Therefore, the number of units of good Y produced at point A is 2 units.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(c)

To find the number of units of good X that can be purchased at point E.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point E is calculated as follows:

$400=$100X+$200YPut Y=0$400=$100X+$200×0$400=$100X+0X=4units

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(d)

To find the number of units of good X that can be purchased at point B.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point B is calculated as follows:

At point B consumer spent his entire nominal amount of money on good Y and buy 2 units of good Y and using $100 gift certificate consumer can consume 1 unit of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(e)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point F is calculated as follows:

At point consumer can consume 5 units of good X as buy spending his $400 income and additional $100 gift certificate, he is spending total of $500 on consumption of good X and consuming 5 units of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(f)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

Based on preferences consumer can rank his preference A, B, C and D.

Consumer will rank his preference as follow:

D>B>C>AD(lies on IC2)>B(lies between IC1 and IC2)>C(lies on IC2)>A(lies below IC1)

IC₂ is the highest IC curve and gives more utility than IC₁.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(g)

To analyze whether good X is a normal good or inferior good.

Expert Solution

Explanation of Solution

X is an inferior good because after getting gift card, he can spend gift card only on good X. Consumer is not splitting gift card on both the goods and using it to buy only X, which explains inferior nature of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

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Answer 3

Question

Chapter 4, Problem 6CACQ

To determine

(a)

To find the prices of good X and Y.

Expert Solution

Explanation of Solution

The equation of Initial budget line is as follows:

$400=$100X+$200Y

The Standard Equation of budget line is as follows:

M=PXX+PYYWhere, M is the income of consumerPX is the price of good XPY is the price of good Y

On comparing with the standard equation of budget line price of good X is $100 and good Y is $200.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(b)

To find the number of units of good Y that can be purchased at point A.

Expert Solution

Explanation of Solution

The number of units of good Y that can be purchased at point A is calculated as follows:

$400=$100X+$200YPut X=0$400=$100×0+$200Y$400=0+$200Y$200Y=$400Y=2units

Therefore, the number of units of good Y produced at point A is 2 units.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(c)

To find the number of units of good X that can be purchased at point E.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point E is calculated as follows:

$400=$100X+$200YPut Y=0$400=$100X+$200×0$400=$100X+0X=4units

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(d)

To find the number of units of good X that can be purchased at point B.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point B is calculated as follows:

At point B consumer spent his entire nominal amount of money on good Y and buy 2 units of good Y and using $100 gift certificate consumer can consume 1 unit of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(e)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point F is calculated as follows:

At point consumer can consume 5 units of good X as buy spending his $400 income and additional $100 gift certificate, he is spending total of $500 on consumption of good X and consuming 5 units of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(f)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

Based on preferences consumer can rank his preference A, B, C and D.

Consumer will rank his preference as follow:

D>B>C>AD(lies on IC2)>B(lies between IC1 and IC2)>C(lies on IC2)>A(lies below IC1)

IC₂ is the highest IC curve and gives more utility than IC₁.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(g)

To analyze whether good X is a normal good or inferior good.

Expert Solution

Explanation of Solution

X is an inferior good because after getting gift card, he can spend gift card only on good X. Consumer is not splitting gift card on both the goods and using it to buy only X, which explains inferior nature of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 4, Problem 6CACQ

To determine

(a)

To find the prices of good X and Y.

Expert Solution

Explanation of Solution

The equation of Initial budget line is as follows:

$400=$100X+$200Y

The Standard Equation of budget line is as follows:

M=PXX+PYYWhere, M is the income of consumerPX is the price of good XPY is the price of good Y

On comparing with the standard equation of budget line price of good X is $100 and good Y is $200.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(b)

To find the number of units of good Y that can be purchased at point A.

Expert Solution

Explanation of Solution

The number of units of good Y that can be purchased at point A is calculated as follows:

$400=$100X+$200YPut X=0$400=$100×0+$200Y$400=0+$200Y$200Y=$400Y=2units

Therefore, the number of units of good Y produced at point A is 2 units.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(c)

To find the number of units of good X that can be purchased at point E.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point E is calculated as follows:

$400=$100X+$200YPut Y=0$400=$100X+$200×0$400=$100X+0X=4units

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(d)

To find the number of units of good X that can be purchased at point B.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point B is calculated as follows:

At point B consumer spent his entire nominal amount of money on good Y and buy 2 units of good Y and using $100 gift certificate consumer can consume 1 unit of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(e)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point F is calculated as follows:

At point consumer can consume 5 units of good X as buy spending his $400 income and additional $100 gift certificate, he is spending total of $500 on consumption of good X and consuming 5 units of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(f)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

Based on preferences consumer can rank his preference A, B, C and D.

Consumer will rank his preference as follow:

D>B>C>AD(lies on IC2)>B(lies between IC1 and IC2)>C(lies on IC2)>A(lies below IC1)

IC₂ is the highest IC curve and gives more utility than IC₁.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(g)

To analyze whether good X is a normal good or inferior good.

Expert Solution

Explanation of Solution

X is an inferior good because after getting gift card, he can spend gift card only on good X. Consumer is not splitting gift card on both the goods and using it to buy only X, which explains inferior nature of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 4, Problem 6CACQ

To determine

(a)

To find the prices of good X and Y.

Expert Solution

Explanation of Solution

The equation of Initial budget line is as follows:

$400=$100X+$200Y

The Standard Equation of budget line is as follows:

M=PXX+PYYWhere, M is the income of consumerPX is the price of good XPY is the price of good Y

On comparing with the standard equation of budget line price of good X is $100 and good Y is $200.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(b)

To find the number of units of good Y that can be purchased at point A.

Expert Solution

Explanation of Solution

The number of units of good Y that can be purchased at point A is calculated as follows:

$400=$100X+$200YPut X=0$400=$100×0+$200Y$400=0+$200Y$200Y=$400Y=2units

Therefore, the number of units of good Y produced at point A is 2 units.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(c)

To find the number of units of good X that can be purchased at point E.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point E is calculated as follows:

$400=$100X+$200YPut Y=0$400=$100X+$200×0$400=$100X+0X=4units

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(d)

To find the number of units of good X that can be purchased at point B.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point B is calculated as follows:

At point B consumer spent his entire nominal amount of money on good Y and buy 2 units of good Y and using $100 gift certificate consumer can consume 1 unit of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(e)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point F is calculated as follows:

At point consumer can consume 5 units of good X as buy spending his $400 income and additional $100 gift certificate, he is spending total of $500 on consumption of good X and consuming 5 units of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(f)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

Based on preferences consumer can rank his preference A, B, C and D.

Consumer will rank his preference as follow:

D>B>C>AD(lies on IC2)>B(lies between IC1 and IC2)>C(lies on IC2)>A(lies below IC1)

IC₂ is the highest IC curve and gives more utility than IC₁.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

To determine

(g)

To analyze whether good X is a normal good or inferior good.

Expert Solution

Explanation of Solution

X is an inferior good because after getting gift card, he can spend gift card only on good X. Consumer is not splitting gift card on both the goods and using it to buy only X, which explains inferior nature of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 6

Chapter 4, Problem 6CACQ

To determine

(a)

To find the prices of good X and Y.

Expert Solution

Explanation of Solution

The equation of Initial budget line is as follows:

$400=$100X+$200Y

The Standard Equation of budget line is as follows:

M=PXX+PYYWhere, M is the income of consumerPX is the price of good XPY is the price of good Y

On comparing with the standard equation of budget line price of good X is $100 and good Y is $200.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 7

Chapter 4, Problem 6CACQ

To determine

(a)

To find the prices of good X and Y.

Answer 8

Expert Solution

Explanation of Solution

The equation of Initial budget line is as follows:

$400=$100X+$200Y

The Standard Equation of budget line is as follows:

M=PXX+PYYWhere, M is the income of consumerPX is the price of good XPY is the price of good Y

On comparing with the standard equation of budget line price of good X is $100 and good Y is $200.

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 13

To determine

(b)

To find the number of units of good Y that can be purchased at point A.

Expert Solution

Explanation of Solution

The number of units of good Y that can be purchased at point A is calculated as follows:

$400=$100X+$200YPut X=0$400=$100×0+$200Y$400=0+$200Y$200Y=$400Y=2units

Therefore, the number of units of good Y produced at point A is 2 units.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 14

To determine

(b)

To find the number of units of good Y that can be purchased at point A.

Answer 15

Expert Solution

Explanation of Solution

The number of units of good Y that can be purchased at point A is calculated as follows:

$400=$100X+$200YPut X=0$400=$100×0+$200Y$400=0+$200Y$200Y=$400Y=2units

Therefore, the number of units of good Y produced at point A is 2 units.

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 20

To determine

(c)

To find the number of units of good X that can be purchased at point E.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point E is calculated as follows:

$400=$100X+$200YPut Y=0$400=$100X+$200×0$400=$100X+0X=4units

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 21

To determine

(c)

To find the number of units of good X that can be purchased at point E.

Answer 22

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point E is calculated as follows:

$400=$100X+$200YPut Y=0$400=$100X+$200×0$400=$100X+0X=4units

Answer 23

Expert Solution

Answer 24

Expert Solution

Answer 25

Expert Solution

Answer 26

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 27

To determine

(d)

To find the number of units of good X that can be purchased at point B.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point B is calculated as follows:

At point B consumer spent his entire nominal amount of money on good Y and buy 2 units of good Y and using $100 gift certificate consumer can consume 1 unit of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 28

To determine

(d)

To find the number of units of good X that can be purchased at point B.

Answer 29

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point B is calculated as follows:

At point B consumer spent his entire nominal amount of money on good Y and buy 2 units of good Y and using $100 gift certificate consumer can consume 1 unit of good X.

Answer 30

Expert Solution

Answer 31

Expert Solution

Answer 32

Expert Solution

Answer 33

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 34

To determine

(e)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point F is calculated as follows:

At point consumer can consume 5 units of good X as buy spending his $400 income and additional $100 gift certificate, he is spending total of $500 on consumption of good X and consuming 5 units of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 35

To determine

(e)

To find the number of units of good X that can be purchased at point F.

Answer 36

Expert Solution

Explanation of Solution

The number of units of good X that can be purchased at point F is calculated as follows:

At point consumer can consume 5 units of good X as buy spending his $400 income and additional $100 gift certificate, he is spending total of $500 on consumption of good X and consuming 5 units of good X.

Answer 37

Expert Solution

Answer 38

Expert Solution

Answer 39

Expert Solution

Answer 40

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 41

To determine

(f)

To find the number of units of good X that can be purchased at point F.

Expert Solution

Explanation of Solution

Based on preferences consumer can rank his preference A, B, C and D.

Consumer will rank his preference as follow:

D>B>C>AD(lies on IC2)>B(lies between IC1 and IC2)>C(lies on IC2)>A(lies below IC1)

IC₂ is the highest IC curve and gives more utility than IC₁.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 42

To determine

(f)

To find the number of units of good X that can be purchased at point F.

Answer 43

Expert Solution

Explanation of Solution

Based on preferences consumer can rank his preference A, B, C and D.

Consumer will rank his preference as follow:

D>B>C>AD(lies on IC2)>B(lies between IC1 and IC2)>C(lies on IC2)>A(lies below IC1)

IC₂ is the highest IC curve and gives more utility than IC₁.

Answer 44

Expert Solution

Answer 45

Expert Solution

Answer 46

Expert Solution

Answer 47

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 48

To determine

(g)

To analyze whether good X is a normal good or inferior good.

Expert Solution

Explanation of Solution

X is an inferior good because after getting gift card, he can spend gift card only on good X. Consumer is not splitting gift card on both the goods and using it to buy only X, which explains inferior nature of good X.

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.

Answer 49

To determine

(g)

To analyze whether good X is a normal good or inferior good.

Answer 50

Expert Solution

Explanation of Solution

X is an inferior good because after getting gift card, he can spend gift card only on good X. Consumer is not splitting gift card on both the goods and using it to buy only X, which explains inferior nature of good X.

Answer 51

Expert Solution

Answer 52

Expert Solution

Answer 53

Expert Solution

Answer 54

Economics Concept Introduction

Budget line: It is the graphical representation of all possible combination of two goods that consumer can afford within his limited income at given prices.