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O A good is normal when a rise in income leads to a fall in the quantity consumed of that good. On the new budget constraint, a choice like C should be made if both goods are normal goods. Choice B if Product 1is an inferior good, and Choice D if Product 2 is an inferior good. O The new budget constraint line can be divided into four groups of choices.

O A good is normal when a rise in income leads to a fall in the quantity consumed of that good. On the new budget constraint, a choice like C should be made if both goods are normal goods. Choice B if Product 1is an inferior good, and Choice D if Product 2 is an inferior good. O The new budget constraint line can be divided into four groups of choices.

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section21.1: The Budget Constraint: What The Consumer Can Afford
Problem 1QQ
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Consider the following graph. Assume that income increases, and the budget constraint line shifts to the right. The utility-maximizing choice on the original budget constraint is A. Enable ZoomPan
Transcribed Image Text:Consider the following graph. Assume that income increases, and the budget constraint line shifts to the right. The utility-maximizing choice on the original budget constraint is A. Enable ZoomPan
OA good is normal when a rise in income leads to a fall in the quantity consumed of that good On the new budget constraint, a choice like C should be made if both goods are normal goods. Choice B if Product 1is an inferior good, and Choice D if Product 2 is an inferior good. O The new budget constraint line can be divided into four groups of choices.
Transcribed Image Text:OA good is normal when a rise in income leads to a fall in the quantity consumed of that good On the new budget constraint, a choice like C should be made if both goods are normal goods. Choice B if Product 1is an inferior good, and Choice D if Product 2 is an inferior good. O The new budget constraint line can be divided into four groups of choices.
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