Question

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Quantity of Milk per Week Quantity of Milk per week B2 B3 Quantity of Bread per Week B B2 B₃ Quantity of Bread per Week 1. Indicate whether the statements regarding Figure (i) and Figure (ii) are true or false, and why. a. The move from A to B indicates that bread and milk are normal goods. b. The move from X to Z shows that bread is not an inferior good. C. The law of demand holds for the consumer's demand for bread.

Answer 1

All the Statements are True,

A shift of the budget curve indicates and increase in the income and shift to the higher indifference curve represents a higher consumption of the good in statement 1 the curve has consumption has increased with increase in the income that means both the goods are normal. in statement 2 consumption of the bread has increased with increasing income that means it a normal good and statement 3 hold trure because law of demand keeps ceteris paribus which is not followed here,