Suppose that there are only two goods (x and y) and good y is an inferior...
Suppose that there are only two goods (x and y) and good y is an inferior good. The demand curve for good x cannot be vertical. True or false. Explain your answer graphically and intuitively.
Homework Answers
Good X is normal good whose demand falls when price of its rises or income falls.
Good Y is inferior good whose demand falls when income rises.
The demand curve of good X cannot be vertical is false as when price increases, real income level falls causing consumer to consume less of the goods but quantity demanded is same. As there is always a positive relationship between level of income and consumption of a normal goods.
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need an appropriate diagram for the answer.
thanks
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