Question

In the following figure, a consumer is initially in equilibrium at point C. The consumer’s income is $ 400, and the budget line through point C is given by $ 400 $ 100X + $ 200Y. When the consumer is given a $ 100 gift certificate that is good only at store X, she moves to a new equilibrium at point D.
a. Determine the prices of goods X and Y.
b. How many units of product Y could be purchased at point A?
c. How many units of product X could be purchased at point E?
d. How many units of product X could be purchased at point B?
e. How many units of product X could be purchased at point F?
f. Based on this consumer’s preferences, rank bundles A, B, C, and D in order from most preferred to least preferred.
g. Is product X a normal or an inferiorgood?


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  • CreatedApril 18, 2014
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