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Suppose the initial price of good 1 is $2 and the initial price of good 2 is $4 and initial income is $100. A consumer maximiFigure Description: Units of good 1 is measured on the horizontal axis and units of good 2 are measured on the vertical axis.Given: Suppose the initial price of good 1 is $2 and the initial price of good 2 is $4 and initial income is $100. A consumerFigure Description: Units of good 1 is measured on the horizontal axis and units of good 2 are measured on the vertical axis.

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Answer #1

Q1) option C)

as budget line shifts parallely to right, so prices are unchanged, income rises

As income rises, Quantity demanded of good 1 rises,

So it's a Normal Good

Q2) option C)

as Q2* rises , with rise in income,

so Q2 is a normal good

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