A consumer is in equilibrium at point A in the diagram below. The price of good X is $5.
A. What is the price of good Y? $____________
B. What is the consumer's income? $____________
C. At point A, how many units of good X does the consumer purchase? _________ units
D. Suppose the budget line changes so that the consumer achieves a new equilibrium at point B. What change in the economic environment led to this new equilibrium?
a. The price of good X decreased to $2.50.
b. The price of good Y increased to $10.
c. The price of good Y decreased to $2.50.
d. The price of good X increased to $10.
E. Is the consumer better off or worse off as a result of the price change?
A consumer's bundle includes two normal goods, good X and good Y. According to the income effect, a(n) ______ in the price of good X or ______ in the price of good Y will cause the consumer to buy less of good X.
