Arya only consumes two goods: X and Y. When the price of X changes, the income effect and the substitution effect for X move in opposite directions. In addition, the income effect for X dominates the substitution effect. X must be: a) a Giffen good for Arya. b) an inferior good for Arya. c) a normal good for Arya. O d) perfect substitutes for Arya. O e) Both a and b are true.
Arya only consumes two goods: X and Y. When the price of X changes, the income effect and the substitution effect for X move in opposite directions. In addition, the income effect for X dominates the substitution effect. X must be: a) a Giffen good for Arya. b) an inferior good for Arya. c) a normal good for Arya. O d) perfect substitutes for Arya. O e) Both a and b are true.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 5CQQ
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