What are luxury, nessesary and inferior goods

Reference no: EM133341584

Questions: 1. Suppose M = 20, p1 = 2 and p2 = 1 initially, but then p1 is then lowered to 1. Show graphically the utility maximizing points chosen by a consumer for whom this good is a Giffen good. Can your sketched indifference curves be consistent with a Cobb Douglas utility func- tion? Explain.

2. What are luxury, nessesary and inferior goods? In a two good world if one good is a luxury good must the other be inferior? Explain.

Reference no: EM133341584

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