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MrGrimey MrGrimey
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6 years ago
Louie purchases the same quantity of Bones even after the price of bones rises. Draw Louie's price-consumption curve and demand curve (two separate graphs!) based on this information. Discuss directions and magnitudes of the income and substitution effects (or graph them clearly). Are Bones normal or inferior for Louie? Explain.
Textbook 
Microeconomics: Theory and Applications with Calculus

Microeconomics: Theory and Applications with Calculus


Edition: 4th
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6 years ago
The PCC is vertical because as price changes, the quantity of bones remains the same. The demand curve is perfectly inelastic (vertical). Because the TE = 0, the SE = -IE and therefore the good is inferior.
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