Question: A consumer has a utility function given by U(x,y)=2x+4y, the price of x is 5, the price of y is 2, and income is 10.Suppose

A consumer has a utility function given by U(x,y)=2x+4y, the price of x is 5, the price of y is 2, and income is 10.Suppose that the price of y increases to 12. The income effect on the consumption of x of the price change of y:

is positive, meaning that the income effect will go in the same direction of the substitution effect

is negative, meaning that the income effect will go in the opposite direction of the substitution effect

is zero, since the goods are perfect substitutes there is no income effect

cannot be determined with the information provided

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