Consumer splits their income equally between two goods

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A consumer splits their income equally between two goods. If the price of one good increases by 10% and their income increases by 5%, show that the consumer’s optimal consumption bundle will change despite them being able to afford their original bundle.

a) Need to make assumption between two goods in the market x and y.

b) Decide if they are normal or inferior.

c) Decide if they are complements or subsitutes.

d) Draw a consumer equlibrium indifference curve and budget line graph.

e) Must explain the conditions and what it cause.

From A to E is what is needed to complete the task....

Reference no: EM131094798

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