Name a normal good, an inferior good, a set of substitute goods, a set of complements that are used in your household daily.For the normal good, make a (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your own household. For the same normal good, make another (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your neighbor. Assuming that you and your neighbor are the only two households in the market, make a market demand schedule for the same normal good. Draw and interpret a graph to show the market demand and impact of changes in quantity demanded if the price of the same normal good decreases.For the inferior good, draw and interpret a graph showing the demand curve and a shift in the curve if your income increases.For anyone good from the set of substitutes, draw and interpret a graph showing the demand curve and a shift in the curve if the price of the substitute decreases.For anyone good from the set of complements, draw and interpret a graph showing the demand curve and a shift in the curve if the price of the complement decreases.

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Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter5: Income And Substitution Effects

Section: Chapter Questions

Problem 5.1P

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Name a normal good, an inferior good, a set of substitute goods, a set of complements that are used in your household daily.

For the normal good, make a (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your own household. For the same normal good, make another (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your neighbor. Assuming that you and your neighbor are the only two households in the market, make a market demand schedule for the same normal good. Draw and interpret a graph to show the market demand and impact of changes in quantity demanded if the price of the same normal good decreases.
For the inferior good, draw and interpret a graph showing the demand curve and a shift in the curve if your income increases.
For anyone good from the set of substitutes, draw and interpret a graph showing the demand curve and a shift in the curve if the price of the substitute decreases.
For anyone good from the set of complements, draw and interpret a graph showing the demand curve and a shift in the curve if the price of the complement decreases.

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