The Figure Below Shows a Consumer Maximizing Utility at Two

question 3

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,it is clear that good X ___________ (is,is not) a Giffen good because _______________.

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

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