assume that clark spends his entire income on the purchase of two goods, x and y. if his income and the…

assume that clark spends his entire income on the purchase of two goods, x and y. if his income and the prices of good x and y all double, clark will\na double the purchase of goods x and y\nb buy more of good x and less of good y\nc buy less of good x and more of good y\nd buy less of both goods x and y\ne buy the same amounts of goods x and y

assume that clark spends his entire income on the purchase of two goods, x and y. if his income and the prices of good x and y all double, clark will\na double the purchase of goods x and y\nb buy more of good x and less of good y\nc buy less of good x and more of good y\nd buy less of both goods x and y\ne buy the same amounts of goods x and y

Answer

Brief Explanations:

The budget - constraint equation is $I = P_X\times X+P_Y\times Y$, where $I$ is income, $P_X$ and $P_Y$ are prices of goods $X$ and $Y$, and $X$ and $Y$ are quantities. If $I' = 2I$, $P_X'=2P_X$ and $P_Y' = 2P_Y$, the new budget - constraint is $2I=2P_X\times X'+2P_Y\times Y'$, which simplifies to $I = P_X\times X'+P_Y\times Y'$. This is the same as the original budget - constraint, so the optimal consumption bundle (quantities of $X$ and $Y$) remains the same.

Answer:

E. buy the same amounts of goods X and Y