(Answered) Note: if your answer ends in a 0 , put the zero. For example P=9.80 not 9.8 .Otherwise, round all…

Note: if your answer ends in a 0 , put the zero. For example P=9.80 not 9.8 .Otherwise, round all answers to the nearest 100 th place (2 decimals)
The graph below shows the budget contraints and utility curves for a consumer for two goods, memos and endos. Note that BC1 represents the initial budget constraint, and BC2 represents the new budget constraint.
If the price of a memo is $170, what is this buyer’s income?
Income = ◻
What is the initial price of an endo?
Pendo = $ ◻
What has changed to cause the new budget constraint?
The price of memos increased
Income has increased
The price of endos decreased
The price of endos increased
Income has decreased
The price of memos decreased
Correct Answer
Which of the following represents the optimal consumption bundle if a buyer has a budget constraint of BC1?
B2
B1
B3
Correct Answer
Which movement represents the substitution effect?
B1 → B2
B3 → B2
B3 → B1
Correct Answer
Are endos a normal good or an inferior good?
Hint: Be careful! While we cannot calculate an income elasticity with the information given, we can figure out whether it is normal or inferior by comparing the income effect to the substitution effect. Check your notes for which effect dominates to answer this question.
normal
inferior
Correct Answer
What is the cross-price elasticity of demand for memos and endos?
Hint: you need to calculate the percentage change in the quantity demanded of memos with respect to the percentage change in the price of endos using the midpoint method.
XED
Incorrect Answer