Javon is consuming his optimal utility-maximizing consumption bundle of lobster and macaroni-and-cheese dinners.Call this bundle A.His income is $100,the price of a macaroni-and-cheese dinner is $5,and the price of a lobster is $20.Put lobsters on the vertical axis and put macaroni-and-cheese dinners on the horizontal axis.His income increases to $500 and the prices of macaroni-and-cheese dinners and lobster remain constant.With the increase in income,Javon changes his consumption of the two goods and now maximizes utility at bundle B.If macaroni-and-cheese dinners are an inferior good for Javon:
A)at bundle B,Javon consumes more macaroni-and-cheese dinners.
B)at bundle B,Javon consumes less lobster.
C)at bundle A and bundle B,the marginal utility of lobster is 5.
D)at bundle B,Javon consumes more lobster.

Question

Quizplus · Accepted Answer

With an increase in income and macaroni-and-cheese being an inferior good, Javon will consume less of it and more of the normal good, lobster, at bundle B.

Javon Is Consuming His Optimal Utility-Maximizing Consumption Bundle of Lobster