Assume you are consuming two goods,X and Y.X and Y are both normal goods but they are not close complements.The price of good X increases but the price of Y remains unchanged.However,you are given enough additional income to ensure that your utility remains unchanged.What happens to your consumption of good X?
A)it increases or decreases
B)it increases over the long run
C)it stays the same
D)it decreases
E)it increases

Question

Quizplus · Accepted Answer

Since X and Y are not close complements, an increase in the price of X will lead to a decrease in the quantity of X demanded. However, since the consumer is given enough additional income to ensure that their utility remains unchanged, they will use some of this additional income to maintain their consumption of Y, while decreasing their consumption of X. Therefore, the consumption of good X decreases.

Assume You Are Consuming Two Goods,X and Y