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Walt Considers X and Y to Be Perfect Substitutes

Question 2

Multiple Choice

Walt considers x and y to be perfect substitutes.They originally cost $10 and $9 respectively.His income is $720.One day the price of x drops to $8.


A) The income effect increases the quantity of y by 90.
B) The substitution effect increases the quantity of y by 80.
C) The substitution effect increases the quantity of x by 90.
D) The income effect increases the quantity of x by 80.
E) None of the above.

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