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Jeremy's preferences for Sprite (x 1 ) and Fanta (x 2 ) are consistent with the utility function : U(x 1 , x 2 )
Jeremy's preferences for Sprite (x1) and Fanta (x2) are consistent with the utility function: U(x1, x2) = x1 + 3x2 . Suppose that the price for Sprite starts at $1 each, the price for Fanta starts at $2 each, and his income in the current time period is $30. If the price of Fanta increases to $2.5 each, what is the change in the quantity of Sprite due to the income effect?
Select one:
a. 0
b. -1
c. 1
d. -3
e. None of the above
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