6 ) Suppose that a consumer's preferences are well behaved in that properties 4-1 to 4-4 (completeness, more is better, diminishing marginal rate of substitution, and transitivity) are satisfied and the initial budget constraint is given by
300=2x+4Y
. At the initial budget constraint, this consumer purchases 100 units of good X and 25 units of good Y. Suppose the price of X increases to
$4
per unit, resulting in a new consumption bundle consisting of 60 units of X and 15 units of Y . Then, the slope of the inverse demand for good X over this consumption range is
A) 0.05 .
B) -0.05 .
C) -0.267 .
D) -0.444 .
Answer is
7. Suppose that a consumer's preferences are well behaved in that properties 4-1 to 4-4 (completeness, more is better, diminishing marginal rate of substitution, and transitivity) are satisfied and the initial equilibrium consumption bundle consists of 100 units of X and 50 units of Y . If
P_(x)
decreases such that the new equilibrium consumption bundle is 150 units of
x
and 75 units of
Y
, then goods
x
and
Y
are
E) complements.
F) substitutes.
G) inferior goods.
H) unrelated.
Answer is