QUESTION 22 This question asks you to compare the Slutsky equations for the consumer's model with monetary income (CM) and for the consumer's model with endowments (CE) Consider the demand for good x and how this demand changes as the price of good x increases Oa. In both the CM and the CE models, if x is a normal good, then the demand for good x must decrease O b. In both the CM and the CE models, if x is an inferior good, then the demand for good x must increase Oc Suppose x is a normal good. While in the CM model the demand for good x must decrease, in the CE model the demand for good x may increase if the consumer is a net seller of good x before the change in price Od. Suppose x is a normal good. While in the CM model the demand for good x must decrease, in the CE model the demand for good x may increase if the consumer is a net buyer of good x before the change in price Oe Suppose x is a normal good. While in the CM model the demand for good x must increase, in the CE model the demand for good x may decrease if the consumer is a net buyer of good x before the change in price

Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter15: Decision Analysis
Section: Chapter Questions
Problem 23P: In Problem 22, if P(s1) = 0.25, P(s2) = 0.50, and P(s3) = 0.25, find a recommended decision for each...
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QUESTION 22
This question asks you to compare the Slutsky equations for the consumer's model with monetary income (CM) and for the consumer's model with endowments (CE).
Consider the demand for good x and how this demand changes as the price of good x increases
O a. In both the CM and the CE models, if x is a normal good, then the demand for good x must decrease
O b. In both the CM and the CE models, if x is an inferior good, then the demand for good x must increase
Oc Suppose x is a normal good. While in the CM model the demand for good x must decrease, in the CE model the demand for good x may increase if the
consumer is a net seller of good x before the change in price
Od. Suppose x is a normal good. While in the CM model the demand for good x must decrease, in the CE model the demand for good x may increase if the
consumer is a net buyer of good x before the change in price
Oe Suppose x is a normal good. While in the CM model the demand for good x must increase, in the CE model the demand for good x may decrease if the
consumer is a net buyer of good x before the change in price
QUESTION 23
The Marginal Rate of Technical Substitution is always equal to the ratio of inputs' prices
O True
O False
Transcribed Image Text:QUESTION 22 This question asks you to compare the Slutsky equations for the consumer's model with monetary income (CM) and for the consumer's model with endowments (CE). Consider the demand for good x and how this demand changes as the price of good x increases O a. In both the CM and the CE models, if x is a normal good, then the demand for good x must decrease O b. In both the CM and the CE models, if x is an inferior good, then the demand for good x must increase Oc Suppose x is a normal good. While in the CM model the demand for good x must decrease, in the CE model the demand for good x may increase if the consumer is a net seller of good x before the change in price Od. Suppose x is a normal good. While in the CM model the demand for good x must decrease, in the CE model the demand for good x may increase if the consumer is a net buyer of good x before the change in price Oe Suppose x is a normal good. While in the CM model the demand for good x must increase, in the CE model the demand for good x may decrease if the consumer is a net buyer of good x before the change in price QUESTION 23 The Marginal Rate of Technical Substitution is always equal to the ratio of inputs' prices O True O False
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