Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 9

A consumer must spend all of her income on two goods ( X and Y ). In each of the following scenarios, indicate whether the equilibrium consumption of goods X and Y will increase or decrease. Assume good X is an inferior good and good X is a normal good.
a. Income doubles.
b. Income quadruples and all prices double.
c. Income and all prices quadruple.
d. Income is halved and all prices double.