Maude thinks delphiniums and hollyhocks are perfect substitutes, one-for-one. If

(c) the entire change in demand for delphiniums will be due to the substitution eect. Income doesn't play the role when they are perfect substitutes

ID: 1098830 • Letter: M

Question

Maude thinks delphiniums and hollyhocks are perfect substitutes, one-for-one. If Delphini-

ums currently cost $5 per unit and hollyhocks cost $6 per unit, and if the price of delphiniums rises

to $10 per unit: (explain or show work)

(a) the income eect of the change in demand for delphiniums will be bigger than the substitution eect.

(b) there will be no change in the demand for hollyhocks.

(d) 1=5 of the change will be due to the income eect.

(e) 4=5 of the change will be due to the income eect.

Income doesn't play the role when they are perfect substitutes

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