Suppose That Consumers' Preferences Are Well Behaved in That Properties

question 55

Multiple Choice

Suppose that consumers' preferences are well behaved in that properties 4-1 - 4-4 are satisfied.Furthermore, assume that both X and Y are normal goods and that the price of good Y increases.Then, which of the following effect is known with certainty.

• A)the income and substitution effect reinforce one another leading to an overall increase in the consumption of good X.
• B)the income and substitution effect reinforce one another leading to an overall decrease in the consumption of good X.
• C)there will be an indeterminate effect on the consumption of good X.
• D)the income and substitution effect will reinforce one another leading to an overall increase in the consumption of good Y.

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Definitions:

Drawn

Refers to the process of creating or producing something, usually in the context of drafting legal documents or pulling a negotiable instrument like a check.

Endorsement

The act of publicly supporting or approving something, or a legal amendment to a document or agreement, often seen in insurance policies or bank checks.

Forged

Created, altered, or imitated with the intent to deceive; typically refers to documents, signatures, or art.

Negligence

The failure to take reasonable care to avoid causing injury or loss to another person, resulting in legal liability for the damages caused.