Points Possible: 10 ( sapling learning The graph below shows 2 budget lines and

Question

Points Possible: 10 ( sapling learning The graph below shows 2 budget lines and 6 consumption points for Pepsi and Dr. Pepper (A,B,C,D,E, and F). Assume that the consumer, Fred, attempts to maximize his utility and exhausts his budget on the two goods If Fred's income increases, the movement from Point A to and Dr. Pepper being an inferior good Grade Category: Gra Description: Policies: Per is consistent with Pepsi being a normal good O Point A O Point E O Point C O Point D O PointBE O PointF You can check your ans You can view solutions You have four attempts Pepsi You lose 15% of the poi answer in your question at that answer. Budget Line 2 For multiple-choice que on the number of choic If Fred's income increases, the movement from Point A tois consistent with Dr. Pepper being a normal good and Pepsi being an inferior good Budget Line 1 O Point A O PointB O Point C O Point D O PointBE O PointF eTextbook Help With This Topic Web Help & Videos Technical Support an Dr. Pepper Note: Budget line 1 is before the increase in Fred's income while Budget line 2 is after the increase in Fred's income Previous O Check Answer Next Exit Hint

Explanation / Answer

1.

Point D

Reason: Income increase will shift the budget constraint to budget line 2. Pepsi being a normal good will see an increase in demand, while Dr. Pepper being an inferior good will see a fall in demand. Thus, point D is justified.

2.

Point F

Reason: Income increase will shift the budget constraint to budget line 2. Dr. Pepper being a normal good will see an increase in demand, while Pepsi being an inferior good will see a fall in demand. Thus, point F is justified.

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