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Principles of Macroeconomics Limit each answer in Short Answer Section to one separate page in pdf...

Principles of Macroeconomics

Limit each answer in Short Answer Section to one separate page in pdf format.

'Rational' Consumer A has initial total resources of 500 units. Construct a graph to depict the effect on her consumption of Good X (price of Good X = 10 units), if her total resources decrease to 200 units for the following two cases: Case N - Good X is a Normal Good, and Case I - Good X is an inferior good. Explain the difference between, and give an example of, a Normal Good and Inferior Good.

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Normal good is a good which has a direct relationship between the consumer's income and the quantity demanded by a consumer. Demand of such good increases with the increase in income of the consumer and demand for such good falls as income falls. Examples of normal good are clothing, electronic and and household appliances.

Inferior goods are the goods which has an inverse relationship between the consumer's income and the quantity demanded by a consumer. Demand of such good falls with the increase in income and rises with the fall in the income. Examples- bus travel.od Total income Normal Good. eno units briu of good ya 10 unih of good no ah.. so unik lo When income falls to 200 units Pric

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