The Following Figure Shows a Portion of a Consumer's Indifference

question 40

Multiple Choice

The following figure shows a portion of a consumer's indifference map and budget lines.The price of good Y is $7 and the consumer's income is $700.Let the consumer begin in utility-maximizing equilibrium at point A on indifference curve I.Next the price of good X changes so that the consumer moves to a new utility-maximizing equilibrium at point B on indifference curve II.Good X is a(an) ___________ good and thus cannot be a _________ good.

• A)normal; Giffen
• B)inferior; Giffen
• C)substitute; Giffen
• D)Giffen; normal
• E)Giffen; substitute

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Definitions:

Matters Of Opinion

Issues or topics that are subjective and open to personal interpretation, beliefs, or preferences, rather than being based on fact or necessity.

Prosperity

Denotes a state of flourishing, wealth, and good fortune, where an individual or community enjoys success and economic well-being.

Reference Groups

Groups that individuals use as a standard for evaluating themselves and their own behavior.

Informational Influence

A phenomenon in social psychology where an individual changes their opinion or behavior to align with what they believe is the correct response based on the information or cues provided by others.