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Q. A consumer is initially in equilibrium at point C. consumer's income is $300 and budget line through point C is provided by $300 = $50X + $100Y. When consumer is provided a $50 gift certificate that is good only at store X, she moves to a new equilibrium at point D.
a. Determine prices of goods X and Y.
b. Explain how many units of product Y could be purchased at point A?
c. Explain how many units of product Y could be purchased at point E?
d. Explain how many units of product Y could be purchased at point B?
e. Explain how many units of product Y could be purchased at point F?
f. Based on this consumer's preferences, rank bundles A, B, C and D in order from most preferred to least preferred.
g. Is product X a normal or an inferior good?
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