Unformatted text preview: m , on goods x 1 and x 2 with prices p 1 and p 2 , respectively. The price p 2 decreases and as a result the consumption of x 1 increases. Therefore: (a) x 1 is a normal good (b) x 2 is an inferior good (c) the consumption of x 2 may increase, but the total expenditure on x 2 does not change Discuss each of the three statements above, indicating whether they are true or false. 1...
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This note was uploaded on 04/11/2008 for the course ECON 150 taught by Professor Eduardofaingold during the Spring '08 term at Yale.
 Spring '08
 EduardoFaingold
 Microeconomics, Utility

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