An individual derives utility from games, g (y-axis), and toy airplanes, a (x-axis), described by the utility function U(g,a)= g^0.6a^0.4. The price per game is $20 and the price of toy airplanes is $10. Using the slope of the income consumption curve (ICC), determine whether games and toy airplanes are normal or inferior goods when income increases from $100 to $200. A)Both goods are normal goods with an ICC slope of . B)Both goods are normal goods with an ICC slope of . C)Both goods are inferior goods with an ICC slope of - . D)Both goods are inferior goods with an ICC slope of - .

Question

Quizplus · Accepted Answer

The Answer of An individual derives utility from games, g (y-axis), and toy airplanes, a (x-axis), described by the utility function U(g,a)= g^0.6a^0.4. The price per game is $20 and the price of toy airplanes is $10. Using the slope of the income consumption curve (ICC), determine whether games and toy airplanes are normal or inferior goods when income increases from $100 to $200. A)Both goods are normal goods with an ICC slope of . B)Both goods are normal goods with an ICC slope of . C)Both goods are inferior goods with an ICC slope of - . D)Both goods are inferior goods with an ICC slope of - .

An Individual Derives Utility from Games, G (Y-Axis), and Toy