What is the total change in the quantity of books purchased

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Reference no: EM131600473

Question: Use Exhibit to answer the following questions.

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a. Suppose the price of a magazine is $2, the price of a book is $10, and the consumer's income is $100. Which point on the graph represents the consumer's optimum-x, y, or z? What are the optimal quantities of books and magazines this individual chooses to consume?

b. Suppose the price of books falls to $5. What are the two optimum points on the graph that represent the substitution effect (in sequence)? What is the change in the consumption of books due to the substitution effect?

c. Again suppose the price of books falls to $5. What are the two optimum points on the graph that represent the income effect (in sequence)? What is the change in the consumption of books due to the income effect? Is a book a normal good or an inferior good for; this consumer? Explain.

d. For this consumer, what is the total change in the quantity of books purchased when the price of books tell from $10 to $5?

e. Use the information in this problem to plot the consumer's demand curve for books in Exhibit.

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Reference no: EM131600473

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