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Please explain your answers clearly and show all your work. Only need Part B Two researchers studied the economic behaviour of hamsters through the following
Please explain your answers clearly and show all your work. Only need Part B
Two researchers studied the economic behaviour of hamsters through the following experiment. They equipped hamsters' cages with two levers. If pressed by a hamster, lever 1 would dispense orange juice, whereas lever 2 would dispense sparkly water. The two economists then conducted three separate experiments. In experiment (i), they reduced the amount of sparkly water that would come out each time a thirsty hamster pressed lever 1. In experiment (ii), they reduced the amount of sparkly water that would come out each time a thirsty hamster pressed lever 2. Lastly, in experiment (iii), the economists reduced the number of times per day hamsters were allowed to press any lever. They found that hamsters reduced their consumption of juice in response to (i) and their consumption of water in response to (ii). They also found that in response to (iii), hamsters reduced their consumption of orange juice and increased their consumption of water. a) Do the three experiments above resemble the changes in prices and income that we occasionally observe in (human) markets? In what sense? Briey explain. b) In the light of your answer to a) above, do you think sparkly water is a normal or inferior good for hamsters? What about orange juice? Is either of them a Giffen good? ExplainStep by Step Solution
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