Question

Good ? is a mystery good. Demand for good ? is given by the following function: ?=3?−3??+6??

1st attempt Part 1 (1 point)See Hint Which of the following goods might be good ??

Choose one: A. housing B. basic meals prepared at home C. meals at nice restaurants D. transportation E. composite of all other goods Part 2 (1 point)

See Hint Which of the following might be good ??

Choose one: A. housing B. basic meals prepared at home C. meals at nice restaurants D. transportation E. composite of all other goods

Answer 1

Part 1:

Option C. In the example above, good x is a normal good which is positively related to income and is also positively related to price. As price increases, consumers consume more of it which is mainly seen in case of Veblen goods where demand exists because of high prices. Thus, meals at nice restaurants where people go because of the high price is an example of this type of good.

Part 2:

Option E. Since good X and Y are complements, thus composite of all other goods can be considered as good Y.