If the consumer is consuming exactly two goods, and she is always spending all of her money, can both of them be inferior goods?

Q: Differentiate between normal goods and inferior goods

A: Normal Goods: - Normal goods are those goods whose demand increases when the income of the consumer…

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: If Cheerios and Milk are complements, consumers consume either one of these goods or the other.…

A: In economics, complement goods are those which are used jointly and can not be used separately. For…

Q: Scott consumes only two goods, rice and soup. His preferences are complete, transitive, monotonic,…

A: The demand for normal and inferior goods changes due to change in the real income of the consumers.…

Q: Which statement BEST describes the principle of diminishing marginal utility?

A: C is the correct option and describes the principle of marginal utility.

Q: Give an example of normal goods that you think will become an inferior good when one day you earn a…

A:

Q: Suppose that a decrease in the price of X results in less of good Y sold. This would mean that X and…

A: 9. Substitution effect:   The substitution effect is the change in the price of goods and services…

Q: Suppose consumer consume two goods. Can both goods be inferior? Can one of the goods be inferior?…

A:

Q: A normal good An inferior good When the price of this commodity rises, the substitution effect is…

A: If customers don't buy much less of a good whilst income rises then it's a NORMAL GOOD, for this…

Q: Think of some other goods for which your preferences might be concave.

A: Concavity of the IC symbolizes that the MRS(marginal rate of substitution) of good X for Y rises…

Q: The marginal utility of the last unit of apples consumed is 10, and the marginal utility of the last…

A: The ratio of the marginal utility of two products is equal to the ratio of prices of the two…

Q: With the help of a graph, explain how the decrease in the income affect the consumer's choice for…

A: The demand for goods, and services comes from the buyers, or consumers of those goods, and services.…

Q: True or False? Two normal goods cannot be substitutes for each other. Illustrate.

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

Q: If a consumer always wishes to consume peanut butter and jam in fixed proportions, he treats these…

A: The consumer either uses jam or peanut butter in normal cases if the price of jam increases then the…

Q: The effect of a decrease in the price of food, as depicted in the figure, leads us to believe that:…

A: A Giffen good is non luxury product for which demand decreases as the price decreases and vice…

Q: What do you understand by price line and budget line? Assuming that a consumer has a monthly income…

A: Budget Line(BL) shows all of the possible combinations of two goods that a consumer can purchase,…

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: Raphael consumes only cheese and crackers. True or False: Cheese and crackers can both be inferior…

A: Inferior good refers to a good whose demand decreases as income of the consumer increases. Both…

Q: When there is a change in price, there is an income effect and a substitution effect. Which is…

A: The income effect is that the change within the consumption of products by consumers supported their…

Q: If two goods were perfect substitutes of each other, it necessarily follows that

A: To find : what happens when two goods are perfect substitutes.

Q: The marginal utility for the third unit of X is 60 utils, and the marginal utility for the fourth…

A: The law of diminishing marginal utility states that  as consumer consumes more and more of a good,…

Q: TU of Good Y (utils) Units of TU of Good Units of Good X X (utils) Good Y 1 20 19 35 32 3 48 3 40 4…

A: According to the question, given that the table of the utility experienced by good X and Y. in two…

Q: If price represents the buyer's 'sacrifice' to consume a particular good, explain how the…

A: Concept Many consumers buy a luxury purse on a regular basis, perhaps as frequently as they buy a…

Q: Economist George Stigler once wrote that, according to consumer theory, “if consumers do not buy…

A: Normal goods are those goods whose demand increases when the income of the consumer increases.…

Q: If the preferences are concave will the consumer ever consume both of the goods together?

A: According to behavioral economics, consumer’s preferences keep on changing due to change in their…

Q: Is a good which is inferior for one Consumer is inferior for all the other consumers also?

A: # The low quality goods which follows a negative income effect are inferior goods.  Griffin goods is…

Q: How does a consumer’s optimal choice of goods change if all prices and the consumer’s income double?

A: If prices and consumer’s income will be double then there is no effect in budget constraint and it…

Q: Consider two normal goods that are imperfect substitutes. Draw a diagram with Good 1 on the…

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

Q: When the price of good 1 decreases, the following is true (select all that applies): a) If good 1 is…

A: Goods refers to the products that meet human desires and give usefulness, such as a gratifying…

Q: John consumes 20 units of food and 24 units of clothing. If food is an inferior good, will John be…

A: Inferior good is the one whose demand declines with increase in income.

Q: Using the consumer choice theory, explain how an individual decides how to adjust her preferred…

A: Consumer choice theory: It refers to the idea in which the consumers will try to purchase to…

Q: A consumer is always indifferent between one unit of good A and one unit of good B, no matter how…

A: When a customer is indifferent between one unit of good A and one unit of good B, regardless of how…

Q: Alex distributes his monthly income of $600 between two goods, movies and food. By spending his…

A: here we calculate the budget line of Alex by using the given information and choose the correct , so…

Q: Who determines how much utility an individual will receive from consuming a good?

A: The demand refers to the total amount of a good which an individual is willing, and able to buy at…

Q: Lisa consumes only two goods, pizzas and burritos. In equilibrium, her marginal utility per slice of…

A: In consumer demand theory, utility maximization requires the ratio of marginal utilities of two…

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: Suppose a person allocates a given budget between food and clothing. If food is an inferior good can…

A: Demand for Inferior goods decline with an increase in income.

Q: Consider two normal goods: pepsi and pizza. if the price of pepsi decreases then the consumption of…

A:

Q: Suppose a consumer spends all of their money on good X and good Z. When the price of good Z…

A: In a market, change in price of a good have two types of effect that are substitution and income…

Q: If we consume an additional unit of goods when utility is maximum, the utility we get from this…

A: Utility refers to satisfaction of consumers that they can get by consuming goods and services.…

Q: Given marginal utility per dollar of guavas is greater than marginal utility of apples, how will the…

A: A consumer is a person who buys products that are available in the market. He does it for satisfying…

Q: explain the consumer equilibrium condition according to the utility theory.

A: Utility: - Utility is the satisfaction derived by any consumer from consuming a good or service.