Question
Hi, can you please help me with this question? You are told that an individual with a fixed income consumes petrol and burgers. Demand for
Hi, can you please help me with this question?
You are told that an individual with a fixed income consumes petrol and burgers. Demand for each of these goods increases with income. When the price of petrol increases, ceteris paribus:
a.
If the income effect dominates the substitution effect. Therefore, the individual consumes more petrol.
b.
The substitution effect on the consumption of petrol is positive.
c.
If the income effect dominates the substitution effect. Therefore, the individual consumes more burgers.
d.
The income effect on the consumption of burgers is negative.
Clear my choice
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