Income and substitution effects of this increase in price

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Jennifer spends her weekly allowance of $100 on goods X and Y. Currently Px = $10 and Py = $5 and she buys 5X and 10Y. The price of Y then doubles and Jennifer now buys equal amounts of X and Y.

(a) With good Y on the Y-axis, illustrate the income and substitution effects of this increase in the price of Y.

(b) What kind of good is Y?

Reference no: EM131167467

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