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John Jones spends all of his money on two items: snacks and computer games, which are both normal goods and complements to each other. Suppose
John Jones spends all of his money on two items: snacks and computer games, which are both normal goods and complements to each other. Suppose that the price of snacks rises. What are the income and substitution effects on computer games, and how should I expect his optimal consumption of computer games to change? A. The income effect on computer games is positive and the substitution effect is negative. Because the goods are complements, John Jones will buy more computer games. B. The income effect on computer games is negative and the substitution effect is negative. Therefore, John Jones will definitely buy fewer computer games. C. The income effect on computer games is positive and the substitution effect is positive. Therefore, John Jones will definitely buy more computer games. D. The income effect on computer games is negative and the substitution effect is positive. Because the goods are complements, John Jones will buy fewer computer games
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