Below is an indifference curve map for a consumer who consumes two goods, X and Y....

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Below is an indifference curve map for a consumer who consumes two goods, X and Y. The consumer's initial optimal consumption bundle is point A. After a price change, the consumer's new optimal consumption is bundle B. Answer the following questions: Q Good Y Determine if the substitution and income effects on Good X and Good Y are positive or negative: • The substitition effect on Good X was • The substitution effect on Good Y was . The income effect on Good X was • The income effect on Good Y was Detemine if goods X and why are normal negative positive zero • Good X is • Good Y is unknown normal inferior Giffen Q Good X Below is an indifference curve map for a consumer who consumes two goods, X and Y. The consumer's initial optimal consumption bundle is point A. After a price change, the consumer's new optimal consumption is bundle B. Answer the following questions: Q Good Y Determine if the substitution and income effects on Good X and Good Y are positive or negative: • The substitition effect on Good X was • The substitution effect on Good Y was . The income effect on Good X was • The income effect on Good Y was Detemine if goods X and why are normal negative positive zero • Good X is • Good Y is unknown normal inferior Giffen Q Good X

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Substitution and Income Effects The substitution effect occurs when the consumer substitutes one good for another due to a change in relative prices h... View the full answer