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Suppose X and Y are substitutes and are both normal goods. Assume X is on the...

Suppose X and Y are substitutes and are both normal goods. Assume X is on the horizontal axis and Y is on the vertical axis. If the price of X increase, which of the following will NOT happen? A) The slope of the income offer curve will become flatter B) The slope of the income offer curve will become steeper C) The Engel Curve for X will become steeper/ "shift" to the left D) The Engel Curve for Y will become flatter/ "shift" to the right.

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Answer #1

Solution: The slope of the income offer curve will become flatter
Explanation: Assuming X and Y to be the normal goods and substitutes, a increase in the price of X will cause slope of the budget constraint to become steeper instead of flatter

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