The Figure Below Shows a Consumer Maximizing Utility at Two

question 105

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 $4.50.When the price of X increases from point S to point R along the demand curve,the income effect of the price increase is ________.

• A)8
• B)10
• C)-8
• D)-10
• E)-12

---

Definitions:

Held-to-maturity Security

A debt security that a company has the intent and ability to hold until its maturity date, recorded at amortized cost.

Semiannual Interest

Interest that is calculated and paid twice a year on an investment or loan.

Consolidation Method

An accounting technique used by firms to combine the financial statements of subsidiaries with those of the parent company to present as one entity.

Equity Securities

Financial instruments like stocks that represent ownership interest in a company or rights to acquire such an interest.