Suppose your income doubled and, at the same time, the prices of all goods doubled. Suppose you continue to purchase exactly the same bundle as before. What would the law of demand suggest about this behaviour?
A)Reasonable, because the relative price did not change.
B)Uncertain, because we don't know if the goods you purchase are normal or not.
C)Once you have a chance to adjust, you will purchase the low cost goods.
D)Not possible, because when the price goes up the quantity demanded always falls.

Question

Quizplus · Accepted Answer

According to the law of demand, the quantity demanded of a good decreases as its price increases, all other things being equal. However, in this scenario, the relative price of the goods has not changed. So, it would be reasonable to continue purchasing the same bundle as before.

Suppose Your Income Doubled And, at the Same Time, the Prices