Compare the following two pairs of goods and answer the following questions about complements, substitutes and the income and substitution effects: (1) Coke and Pepsi (2) Shoes and socks In which case will a consumer respond more to a change in the relative price of the two goods?

Q: Considering peanut butter and jelly as compliment goods, if demand of peanut butter decreases…

A: A good that is being used to add value to another good or could not be used without each other is…

Q: Explain, with the aid of a graph, the effect of an increase in the income on the equilibrium price…

A: Income elasticity of demand is used by economists to determine whether a product is a necessity or a…

Q: What is the difference between good x as a function of price and income and good x as a function of…

A: Factors affecting demand are demand determinants. Price (P) , income(Y) , utility (U), taste and…

Q: Assume for this question only that when the price of dresses decreases, less of that good is…

A: When the price of the good (dresses) decreases then there must be an increase in demand but here it…

Q: Harry's income declines and as a result, he buys more pumpkin juice. Is pumpkin juice an inferior or…

A: A good is considered an inferior good if its demand is inversely related to the income of the…

Q: Q.4. Compare the following two pairs of goods: • Coke and Pepsi • Racket and Shuttle a) In which…

A: The budget constraint of the consumer shows all the different combinations of two goods a consumer…

Q: If a good is a Normal Good and its price decreases, what are the directions of the Substitution…

A: Answer- (A)   That is both increases

Q: Explain the income and substitution effects of a price increase for a normal good. III

A: The normal good refers to the good which is positively connected to the income level. A rise in the…

Q: Q71 If the price of a normal good changes, the income effect of the price change...

A: A normal good is one that has an increase in demand as a result of rising consumer income. Income…

Q: Suppose the price of potatoes falls and we observe a decrease in an individual's purchases of…

A: A good is a Giffen good if its quantity demand falls with fall in price.

Q: Consumer's utility is U(x,y)3Dx-1)y. The income is 84, the price of good x is fixed at 12. The price…

A: Given  Utility function U(x,y)=(x-1)y     ......... (1) Let px and py denotes the price of good x…

Q: Using the following concepts, explain why price and quantity demanded have an inverse relationship.…

A: We have inverse relationship between price and quantity demanded.

Q: With the aid of a diagram analyse the income, substitution and total effect of a price change on the…

A: Initially understanding what substitution and income effect is: When the price of a good declines,…

Q: What is the difference between the income effect and the substitution effect of aprice increase for…

A: Income effect shows the impact increase in the purchasing power on consumption, whereas substitution…

Q: If two goods are perfect complements, then the change in demand that occurs from a change in the…

A: A complimentary smart is one whose attractiveness grows because the quality of its companion grows.…

Q: Question attahed in image

A: Two goods are said to be the perfect substitute when MRS (marginal rate of substitution) between…

Q: A consumer has the following demand function for good 1: x1 = (1/4)(m/p1) The original price of the…

A: Individuals (consumers) directly concerned within the acquisition, use, and disposal of economic…

Q: Q16 The substitution effect of a price change leads consumers to _____ their demand for goods whose…

A: The answer is - b. Reduce, norm The substitution effect of a price change leads consumers to…

Q: Jess is an artist and spends all of her income on pen and pencils. Pen costs $4 per piece and pencil…

A: Jess is an artist and spends all of her income on pen and pencils. As given price of pen is $4 per…

Q: For a consumer, her demand for one of the products is given by x1 = 0.05m-4p. Her income is $420 and…

A:

Q: Compare the following two pairs of goods and answer the following questions about complements,…

A:

Q: a) Jim buys gingerbread and candy, both of which are normal goods. When the price of gingerbread…

A: Income effect refers to the change in the quantity of good due to change int he price of that good,…

Q: Identify the two goods which are substitutes. (Multiple Choice) A) Good Y and Good Z B) Good X and…

A: Substitute goods are goods that can be used as alternates for the same purpose. Soo, these goods…

Q: For normal goods A) the substitution effect of a price decrease will decrease the quantity of the…

A: A normal good is a product which is undergoing a spike in demand leading to a growth in the earnings…

Q: Using separate diagrams illustrate the income and substitution effects of a price increase for an…

A: Answer: An inferior good: A good is said to be inferior if it has an inverse relationship with…

Q: If two goods are perfect complements then the change in demand that occurs from a change in the…

A: Two goods are perfect complements when they are consumed together in fixed proportion.

Q: Yakov consumes only cheese and crackers. Cheese and crackers    both be inferior goods for…

A: According to inferior goods, as person’s income rises, the demand for inferior goods decreases.…

Q: Refer to Figure 1. Following figure shows the budget constraint for Leyla. When the price of shirts…

A: According to the theory of economics, if the price of one substitute or complement increases that…

Q: Use diagram to illustrate the Slutsky income and substitution effects of an increase in the price of…

A: The question says about the effect of income and substitution effect due to an increase in the price…

Q: When the price of a normal good falls,a. both the income and substitution effects combineto cause…

A: Normal goods: - if the quantity demanded of any good increases with the increase in consumer’s…

Q: Orange 10 Apple 5 6 9 Refer to figure. Suppose a consumer consumes 9 units of apple at the initial…

A: The quantity of an item required by consumers at a certain price for a specific period is referred…

Q: Philip's utility function is -0.45 +92- Calculate the substitution, income, and total effects for a…

A: Here we have Uq1,q2=8q1-0.45+q2 At the point of equilibrium, marginal rate of substitution=MRS=P1P2…

Q: What happens to demand for normal goods when there is rise in substitute goods

A: Demand refers to a commodity that a consumer wish to purchase at a given price in a given period of…

Q: The utility function is x+min(6.y). Income is 12, price of good x is 3. Price of good y decreased…

A: SUBSTITUTION EFFECTS- It means the change in the number of goods with respect to a change in the…

Q: Sohail’s income declines and as a result, he buys more pumpkin juice. Is pumpkin juice an inferior…

A: As Sohail buys more pumpkin juice as his income declines, here pumpkin juice is an inferior good.…

Q: Suppose that a consumer spends a fixed amount of income per month on the following pairs of goods:…

A: ANS Let us suppose that there are 2 commodities X and Y if the DD of X increases when the price of Y…

Q: Answer the attached question

A: Substitutes goods are used in place of each other while complement goods are used together.

Q: Suppose that Sam has a utility function u(x, y)= x+y where x is the amount of good 1 and y is the…

A: The change in demand due to change in the rate of exchange is called Substitution Effect on the…

Q: Discuss fully the effect of each of the following to a couple’s demand for children and other goods.…

A: Law of demand shows that the increment in price causes to reduction in the quantity demanded and…

Q: or Sara, ramen noodles are a normal good, however Sean considers ramen noodles to be inferior. If…

A: The measure that depicts the percentage change in quantity being demanded for a good with respect to…

Q: The change in consumption of a good that occurs when its price falls is the result of Select one:…

A: Income effect refers to the change in the quantity of good due to change in the price of that good,…