In the following figure, a consumer is initially in equilibrium
at point C. The consumer’s income is $600, and the budget line
through point C is given by $600 = $100X + $200Y. When the consumer
is given a $100 gift certificate that is good only at store X, she
moves to a new equilibrium at point D. "The horizontal axis is
labeled Product X. The vertical axis is labeled Product Y. A line
begins at point A on the vertical axis goes down to the right and
ends at point E on the horizontal axis. A second line parallel to
the first one begins at point B in the first quadrant close to
point A, goes down to the right and ends at point F on the
horizontal axis. A horizontal line connects point A and B. An
upward-facing curve labeled l-subscript 1 begins at the top left of
the quadrant along the vertical axis, goes down to the right in
decreasing steepness, intersects the horizontal line [AB], meets
the first line at point C then continues with increasing to the
right and above the line to exit the right of the quadrant. An
upward-facing curve labeled l-subscript 2 begins at the top left of
the quadrant, goes down to the right in decreasing steepness, meets
the second line at point D then continues with increasing steepness
to the right and above the line to exit the right of the quadrant."
Determine the prices of goods X and Y. Price of X: $ Price of Y: $
How many units of product Y could be purchased at point A? How many
units of product X could be purchased at point E? How many units of
product X could be purchased at point B? How many units of product
X could be purchased at point F? Based on this consumer’s
preferences, rank bundles A, B, C, and D in order from most
preferred to least preferred. (Click to select) D, B,
C, A D, C, A, B A, B, C, D C,
A, B, D Is product X a normal or an inferior good? (Click to
select) Inferior Normal
