Sumaiya, who consumes pepsi and pizza, gets a raise in her income from $300 to $400. Pepsi costs her $2 per glass and pizza costs $10. a. Show what happens to her optimal consumption point if both Pepsi and pizza are normal good? b. Show what happens if pizza is an inferior good.

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Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.