Figure 4.2 A Consumer's Original Utility Maximizing Market Basket of Goods Is

question 163

Multiple Choice

Figure 4.2
A consumer's original utility maximizing market basket of goods is shown in Figure 4.2 as point A. Following a price change, the consumer's utility maximizing market basket is at point B.
-Based Figure 4.2, clothing is:

• A) a normal good.
• B) an inferior good, but not a Giffen good.
• C) a Giffen good.
• D) none of the above

---

Definitions:

Price Levels

The overall mean cost of the wide spectrum of goods and services in the economy.

Real GDP

Gross Domestic Product adjusted for inflation, representing the value of all goods and services produced over a specific time period at constant prices.

Depreciation

The gradual reduction in the economic value of the physical assets of a company due to wear and tear over time, or the loss in value of a currency.

NDP

Net Domestic Product; it calculates the total value of all goods and services produced within a country in a specific period minus depreciation.