A consumer spend all their income on jewelry and jeans, and the price of jewelry is three times the price of jeans. In order to maximize her total utility, she should:
a. buy three times as much as jewelry as paris of jeans
b. Buy three times as many paris of jeans as jewelry
c. buy both items until the marginal utility of jewelry is three times the marginal utility of a pair of jeans
d. buy both items until the marginal utility of a pair of jeans is three times the marginal utility of jewelry
Dave consumes two Normal goods, X and Y, and is currently at an optimum. If the price of good X increases, we can predict with certainty that:
a. He will definitely consume more of both goods since his real income has increased
b. He will definitely consume less of both goods since his real income has decreased.
c. the substitution effect will be positive for good X and negative for good Y.
d. non of the above are correct.