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The Figure Below Shows a Consumer Maximizing Utility at Two

Question 3

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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 _______________. 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.


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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