Assume that Liza spends her entire income on the purchase of two goods, X and Y....

Question

Question

Assume that Liza spends her entire income on the purchase of two goods, X and Y. If her income and the prices of good X and Y all double, Liza will

(a) buy more of good X and less of good Y

(b) buy less of good X and more of good Y

(c) buy more of good X and more of good Y

(d) buy the same amount of good X and Y

business economics

Answer 1

Answer #1

d) buy the same amount of good X and Y.

Budget constraint remains the same when prices of both the goods and income change by same proportion.

Answer 2

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