-The above figure shows Bobby's indifference map for soda and juice.B1 indicates his original budget line.B2 indicates his budget line resulting from an increase in the price of soda.From the graph,one can conclude that
A)Bobby views soda as an inferior good.
B)Bobby's demand for soda is perfectly inelastic.
C)Bobby views soda as a normal good.
D)the income elasticity of demand for soda is one.

Question

-The above figure shows Bobby's indifference map for soda and juice.B1 indicates his original budget line.B2 indicates his budget line resulting from an increase in the price of soda.From the graph,one can conclude that
A)Bobby views soda as an inferior good. 
B)Bobby's demand for soda is perfectly inelastic. 
C)Bobby views soda as a normal good. 
D)the income elasticity of demand for soda is one.

Quizplus · Accepted Answer

Bobby views soda as a normal good because when the price of soda increases (moving from B1 to B2), he buys less soda and more juice, indicating that as his purchasing power decreases for soda, he reduces his consumption of it, which is characteristic of a normal good.

-The Above Figure Shows Bobby's Indifference Map for Soda and Juice.B1