Cindy Consumes Goods X and Y

question 36

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:

Social Skills

The abilities used to communicate and interact with others effectively, both verbally and non-verbally, through gestures, body language, and personal appearance.

Depression

A constant state of depression or apathy towards daily tasks signifies this mental illness, leading to considerable difficulties in personal life.

Environmental Stress

The stress experienced by individuals as a result of adverse or challenging environmental conditions.

Deterioration

The process of becoming progressively worse.