Suppose that a consumer's preferences are well behaved in that properties 4-1 to 4-4 are satisfied and the initial equilibrium consumption bundle consists of 10 units of X and 25 units of Y. If PY increases such that the new equilibrium consumption bundle is 15 units of X and 10 units of Y, then goods X and Y are:
A. unrelated.
B. normal goods.
C. complements.
D. substitutes.
Answer: D
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Consider two scenarios for a nation's economic growth. Scenario A has real GDP growing at an average annual rate of 2%; scenario B has an average annual growth of 4%. The nation's real GDP would double in about
A. 36 years under scenario A, versus 18 years under scenario B. B. 36 years under scenario A, versus 9 years under scenario B. C. 18 years under scenario A, versus 9 years under scenario B. D. 25 years under scenario A, versus 12.5 years under scenario B.
Indifference curves cannot ever be concave for two goods
Indicate whether the statement is true or false
Contrast the Keynesian and Monetarist views on the effectiveness of fiscal policy
Specialization in production
a. raises productivity. b. requires money. c. stimulates exchange. d. All of the above are correct.