Cindy Consumes Goods X and Y

question 25

Multiple Choice

Cindy consumes goods x and y. Her demand for x is given by x(p_x, m) = 0.05m -5.15p_x. Now her income is $419, the price of x is $3, and the price of y is $1. If the price of x rises to $4 and if we denote the income effect on her demand for x by DI and the substitution effect on her demand for x by DS, then

• A) DI = -0.28 and DS = -0.52.
• B) DI = -0.28 and DS = -4.88.
• C) DI = -0.52 and DS = -0.52.
• D) DI = 0 and DS = -2.00.
• E) None of the above.

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Definitions:

Guideline

A set of recommended practices or instructions that provide direction or advice on how to proceed in a particular area or situation.

Low-Level Managers

Individuals who hold positions of authority at the lower tiers of an organization’s hierarchy, typically responsible for managing frontline employees and day-to-day operations.

Implementing Programs

The process of putting plans or projects into action to achieve desired goals or outcomes.

Long-Range Plans

Strategic plans that outline goals and objectives for a long-term period, usually extending several years into the future.