The Figure Below Shows a Consumer Maximizing Utility at Two

question 22

Multiple Choice

The figure below shows a consumer maximizing utility at two different prices (the left panel) and the consumer's demand for good X at the same two prices of good X (the right panel) .The price of good Y is $14.When the price of X increases from point M to point N along the demand curve,it is clear that good X ___________ (is,is not) a Giffen good because _______________.

• A)is; the total effect of the price increase is negative.
• B)is; the income effect reinforces the substitution effect.
• C)is; the income effect is larger than the substitution effect.
• D)is not; the substitution effect reinforces the income effect.
• E)is not; good X is an inferior good.

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Definitions:

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as net profit divided by initial cost.

Total Liabilities

The sum of all financial obligations and debts owed by a company at a given time.

Total Assets

The sum of all assets owned by an entity, including cash, investments, inventory, and property.

Total Current Assets

The sum of all assets of a company expected to be converted into cash within one financial year.