An individual derives utility from games, g (y-axis), and toy airplanes, a (x-axis), described by the utility function U(g,a) = g0.6a0.4. The price per game is $20 and the price of toy airplanes is $10. Using the slope of the income consumption curve (ICC), determine whether games and toy airplanes are normal or inferior goods when income increases from $100 to $200.
A) Both goods are normal goods with an ICC slope of 3/4.
B) Both goods are normal goods with an ICC slope of 4/3.
C) Both goods are inferior goods with an ICC slope of -4/3.
D) Both goods are inferior goods with an ICC slope of – 3/4.
ANSWER
A
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