Caroline spends her money on movie tickets and concert tickets. Last summer, the price of concert tickets fell whilst Caroline's overall income as well as the price of movie tickets stayed the same. The graph below shows that Caroline's optimal basket changed from A to B and also decomposes the change into the substitution effect and the income effect. Point I. lies on taroline's original indifference curve, and her marginal rates of substitution at points B and I" are the same. Based on the graph, which of the following is true? 20 - Concert tickets 15 BC 2 11.5 BC 1 10 IC 2 Movie tickets 12 16 20 Caroline's total expenditure on concert tickets will increase due to the price change Concert tickets are a normal good for Caroline All of these are true Movie tickets are an inferior good for Caroline
Caroline spends her money on movie tickets and concert tickets. Last summer, the price of concert tickets fell whilst Caroline's overall income as well as the price of movie tickets stayed the same. The graph below shows that Caroline's optimal basket changed from A to B and also decomposes the change into the substitution effect and the income effect. Point I. lies on taroline's original indifference curve, and her marginal rates of substitution at points B and I" are the same. Based on the graph, which of the following is true? 20 - Concert tickets 15 BC 2 11.5 BC 1 10 IC 2 Movie tickets 12 16 20 Caroline's total expenditure on concert tickets will increase due to the price change Concert tickets are a normal good for Caroline All of these are true Movie tickets are an inferior good for Caroline
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 1PA
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