Question: Suppose a consumer is currently getting utility from U1 which has the points (x = 12, y = 0), (x = 6, y = 8),

Suppose a consumer is currently getting utility from U1 which has the points (x = 12, y = 0), (x = 6, y = 8), and (x = 4, y = 14).  

The price of x is $4.

The price of y is $2.

The consumer's income is $40.

After a change in the price of x to $3, the consumer starts consuming the bundle (x = 10, y = 5).

Are goods x and y gross complements or gross substitutes for this consumer? Explain how your arrived at your answer.

Step by Step Solution

★★★★★

3.39 Rating (152 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

To determine whether goods x and y are gross complements or gross substitutes for the consumer we ne... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Q:

If you dissolve 8.14 grams of calcium chloride, CaCl 2 , in enough water to make 125.0 mL of solution, what is the molarity of the solution?

Q:

The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...

Q:

Suppose a consumer is currently purchasing 47 different goods, one of which is housing. The quantity of housing is measured by H. Explain why, if you wanted to measure the consumer's marginal utility...

Q:

Suppose a consumer has the following utility function defined over the 2 goods X and Y: a. If this consumer originally consumed 10 units of X and 24 units of Y, and if the consumption of X were...

Q:

Problem 1: Suppose a consumer has the following utility function dened over the 2 goods X and Y: er{x,r)=%y+x a. If this consumer originally consumed 3 units of X and 12 units of I\

Q:

Question 2 9 pts Suppose a consumer has $800 to spend on two goods, Good X and Good Y. The price of Good X is given by Py = $16. The price of Good Y is given by Py = $10. a) Consider the consumer's...

Q:

M Homep X M Quizzes X MI Homep X M Exam R X M Grades X EURO 2 X Euro Pe X P Course X s/quizzing/user/attempt/quiz_start_frame_auto.d21?ou=801826&isprv=&qi=376600&cfql=0&dnb=0&fromQB=0&inProgress=0 23...

Q:

MI Homep X M Quizzes X M Homep X M Exam R X M Grades X EURO 2 X Euro Pe X P izzing/user/attempt/quiz_start_frame_auto.d21?ou=801826&isprv=&qi=376600&cfql=0&dnb=0&fromQB=0&inProgress=0 O 1: Question...

Q:

1.Suppose there are two consumers, A and B. The utility functions of each consumer are given by: U A (X,Y) = X * Y U B (X,Y) = X*Y 3 Therefore: For consumer A: MU X = Y; MU Y = X For consumer B: MU X...

Q:

COBECON Term 2 AY 2021-2022 Problem Set 2 (50 pts) Instructions: 1. Problem sets are to be submitted individually but you can answer with your classmates. It is advisable that you work on the problem...

Q:

Use a 3-quarter moving average method to forecast the no of the participants from quarter 4, 2011 to quarter 4, 2019 Quarter Year Quarter 1 Quarter 2 Quarter 3 Quarter 4 2011 569 131 353 183 2012 492...

Q:

You are trying to estimate the cost of capital for La Coste, an upscale specialty retailer. The firm is in only one business, specialty retailing; comparable firms have an average published beta of...

Q:

Find the point ( s ) o f intersection o f the curves r = 1 and r = 2 c o s . a . ( 1 , 6 ) , ( 1 , - 6 ) b . ( 1 , 4 ) , ( 1 , - 4 ) c . ( 1 , 3 ) , ( 1 , - 3 ) d . ( 1 , 6 ) e . ( 1 , 3 )

Q:

A practicing Certified Public Accountant, who is single, has a younger brother as dependent. He had the following data in 2019: Income from employment Jan. to Sept. 2019 Basic salary (net of P2,...

Q:

A producer gas made from coke has the following composition by volume: CO - 28.0% CO2 - 3.5 % O2 - 0.5 % N2 - 68.0 % (Total-100.0%) This gas is burned with such a quantity of air that the oxygen from...

Q:

a) Propose a synthesis for the phenolic compound below starting from benzene and any compound with 2 or less carbons. CH;OCH2CH3 OH

Q:

6. A gas tank on a dock has a small puncture and is leaking gas at the rate of lcm / min' into a lake. It forms a circular slick that is 1 mm thick on the surface of the water. a) Find the amount of...

Q:

You are the fund manager of a stock portfolio in one of established fund management company in Kuala Lumpur. On October 1, your portfolio consists of the eight stocks listed in the following table...

Q:

ACCOUNTING FOR BIOLOGICAL ASSETS AND AGRICULTURAL PRODUCE A company presented the following information related to its agricultural activity: Biological assets with fair value less cost to sell of...

Q:

Consider the manufacturer of golf balls in Problem 12.8. The firm faces the demand curve P = 100 - Q, and operates with a marginal cost of 10 for all units produced. Among all the possible block...

Q:

What can you say about the income elasticity of demand of a normal good? of an inferior good?

Q:

Carlos has a utility function that depends on the number of musicals and the number of operas seen each month. His utility function is given by U = xy2, where x is the number of movies seen per month...

Q:

1. There are many ways to describe feeling sad and depressed. In your culture, what are different idioms for expressing feelings of sadness and depression (such as feeling blue or down in the dumps)?...

Q:

2. Say you wanted to find out about the gestures of a particular culture and their meaning. How would you go about doing that research? How would you know for sure thats what people actually did when...

Q:

1. How do you define good health for yourself? Does your definition resemble the WHO definition of health? Does it incorporate other aspects of health that are not mentioned in the WHO definition?