Consumers buy two products: carrots and celery . When the price of apples rises (due to...
Consumers buy two products: carrots and celery . When the price of apples rises (due to a supply shift), then:
Substitution effect on quantity of celery : QB_______________
Income effect on quantity of celery:_________________
Assuming celery are______________goods.
Overall effect on quantity of celery : QB_________________
A good would be a Giffen Good if it was a(n)_______________goods
And the ______________________effect dominates the_______________________effect
Homework Answers
An increase in price of apple will increase the demand of celery due to substitution effect
income effect on quantity of celery will be negative. I.e. Celery demand decreases due to Income effect
assuming celery to be a normal good
overall Qb will rise
A good would be a Giffen good if it was a inferior goods and the income effect dominates the substitution effect
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