In the following figure, a consumer is initially in equilibrium at point C. The consumers income is

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?

Transcribed Image Text:

Product Y Product X