A consumer has rational and well-behaved preferences. The consumer buys good 1 and good 2 and his initial bundle is . The price of increases and the new bundle consumed is . Good 1 is a gross substitute of good 2. Suppose now that the consumer is compensated for the price change and his purchasing power is kept constant.

Question

A consumer has rational and well-behaved preferences. The consumer buys good 1 and good 2 and his initial bundle is    . The price of      increases and the new bundle consumed is   . Good 1 is a gross substitute of good 2. Suppose now that the consumer is compensated for the price change and his purchasing power is kept constant.

Accepted Answer

The consumer will consume an amount of good 1 that is lower than     only if the good 1 is inferior.

Answer

The consumer will consume an amount of good 1 that is lower than     only if the good 1 is normal.

Answer

The consumer will consume an amount of good 1 that is lower than    only if the good 1 is inferior.

Answer

The consumer will consume an amount of good 1 that is lower than     only if the good 1 is normal.

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A consumer has rational and well-behaved preferences. The consumer buys good 1 a...

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