Please answer and explain. 6. Suppose that sushi is a normal good and Top Ramen

Question

Please answer and explain.

6. Suppose that sushi is a normal good and Top Ramen is an inferior good. Which of the following must be true on a graph showing the income and substitution effects if the price of Top Ramen rises? Let A mark the original consumption bundle, C mark the new consumption bundle, and B separate the income and substitution effects. Also let sushi be on the x-axis and Top Ramen be on the y-axis. (Midterm 2) a. Bis to the right of A and Cis to the right of B on the x-axis. b. Bis to the left of A and C is to the right of A on the x-axis. c. Cis between Aand Bon the y-axis. d. Cis below A and Bon the y-axis. e. C is above A and B on the y-axis.

Explanation / Answer

c.C is betweeen A and B on the Y-axis

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