Suppose that a consumer's preferences are well behaved in that properties 4-1 to 4-4 are satisfied and the initial budget constraint is given by 300 = 2x + 4y. at the initial budget constraint, this consumer purchases 100 units of good x and 25 units of good y. suppose the price of x increases to $4 per unit, resulting in a new consumption bundle consisting of 60 units of x and 15 units of y. then, the slope of the inverse demand for good x over this consumption range is: multiple choice −0.05. −0.444. 0.05. −0.267.

The correct answer is −0.05.

Explanation:

The initial budget constraint is given by 300 = 2X + 4Y.

The consumer purchases 100 units of good X and 25 units of good Y.

The price of X increases to $4 per unit, resulting in a new consumption bundle consisting of 60 units of X and 15 units of Y.

Inverse demand function of good X:

Q = a - bP

When P = 2 [From initial budget constraint], Q = 100

So, 100 = a - 2b ..... (i)

When P = 4, Q = 60

60 = a - 4b .......(ii)

on subtracting equation (ii) from equation  (i)

40 = 2b

b = 20

So,

a = 100 + 2b [From (i)]

= 100 + 40 = 140

So inverse demand function:

Q = 140 - 20P

Or,

20P = 140 - Q

P = 7 - 0.05Q

Slope of the inverse demand function

=

= - 0.05

answer; enforce the rules;

answerpounds of plastic to purchase 200+60-20=(240);