Prince is currently consuming some of good X and some of good Y. If good Y is a normal good for Prince, then an increase in his income will definitely cause him to
A)increase his consumption of X.
B)increase his consumption of Y.
C)decrease his consumption of X.
D)decrease his consumption of Y.

Question

Quizplus · Accepted Answer

Since good Y is a normal good for Prince, an increase in his income will lead to an increase in his consumption of Y. This is because with more income, Prince can afford to purchase more of both good X and good Y, and since good Y is normal for him, he will choose to increase his consumption of it. It is not necessarily the case that an increase in income will lead to a decrease in consumption of either good X or good Y, so options A, C, and D can be eliminated.

Prince Is Currently Consuming Some of Good X and Some