Suppose the price of X is $5 and the price of Y is $10 a
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Suppose the price of X is $5 and the price of Y is $10 and a hypothetical household has $500 to spend per month on goods
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Suppose the price of X is $5 and the price of Y is $10 and a hypothetical household has $500 to spend per month on goods X and Y. a. Sketch the household budget constraint. b. Assume that the household splits its income equally between X and Y. Show where the household ends up on the budget constraint. c. Suppose the household income doubles to $1,000. Sketch the new budget constraint facing the household. d. Suppose after the change the household spends $200 on Y and $800 on X. Does this imply that X is a normal or an inferior good? What about Y?
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