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Assume the following expression summarizes an individual's demand for good #1: q d 1 (p 1 , p 2 , y) = 10 p 1
Assume the following expression summarizes an individual's demand for good #1:
qd1 (p1, p2 , y) = 10 p1 + 2p2 y
Currently, the individual's available income is $10 (y=10), the price of good #1 is $8 (p1=8), and the price of good #2 is $5 (p2=5). Which one of the changes below would cause the largest increase in the individual's consumption of good #1?
a.) The price of good #1 increases by 1%
b.) The individual's income falls by 1%
c.) The price of good #1 falls by 1%
d.) The price of good #2 falls by 1%
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