Figure 21-17
-Refer to Figure 21-17. When the price of X is $40, the price of Y is $40, and income is $160, Paul's optimal choice is point B. Then Paul's income increases to $320, and his optimal choice is point E. For Paul,
A)good X is a normal good, and good Y is an inferior good.
B)good X is an inferior good, and good Y is a normal good.
C)both good X and good Y are normal goods.
D)good Y is a normal good; good X is neither a normal nor an inferior good.

Question

Figure 21-17 
-Refer to Figure 21-17. When the price of X is $40, the price of Y is $40, and income is $160, Paul's optimal choice is point B. Then Paul's income increases to $320, and his optimal choice is point E. For Paul,
A)good X is a normal good, and good Y is an inferior good. 
B)good X is an inferior good, and good Y is a normal good. 
C)both good X and good Y are normal goods. 
D)good Y is a normal good; good X is neither a normal nor an inferior good.

Quizplus · Accepted Answer

With an increase in income, Paul's optimal choice shifts from B to E, indicating that both X and Y are normal goods for him.

Figure 21-17 -Refer to Figure 21-17. When the Price of X Is