Sharon spends all of her income on peaches and strawberries.Peaches are a normal good for her.Her income increased by 20 percent and prices did not change.Her consumption of strawberries could not have increased by more than 20 percent.

Question

Quizplus · Accepted Answer

Since peaches are a normal good, an increase in income will lead to an increase in the consumption of peaches. This means that Sharon will have less income left to spend on strawberries, so her consumption of strawberries cannot have increased by more than 20 percent.

Sharon Spends All of Her Income on Peaches and Strawberries