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Suppose that Jim uses his budget to purchase 100 units of Good X and 100 units of Good Y . When the price of Good
Suppose that Jim uses his budget to purchase100 units of Good X and 100 units of Good Y. When the price of Good X rises, he purchases50 units of Good X and 95 units of Good Y. An economist calculates his compensated budget and finds that in that scenario, Jim would buy80 units of Good X and 105 units of Good Y.
Calculate the income effect.
(Remember to include a negative sign (-) if the effect reduces the quantity.)
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