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15 July, 04:27

Quinn's income to spend each month on two normal goods, bowling or eating out, is $100. It costs $10 to bowl for the night, and it costs $20 for Quinn to eat at a restaurant. Quinn currently consumes four nights of bowling and three meals at a restaurant. If the price of bowling increased to $15, the income effect would predict:

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  1. 15 July, 06:54
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    In this case the income effect would predict:

    Quinn would consume less meals and less bowling.

    Explanation:

    Quinn would do this because:

    As the bowling has increased from 10$ to 15$. Also, Quinn is consuming and four nights of bowling and three meals.

    Total Income = 100$

    Suppose if Quinn has decreased the number of bowling from 4 to 3 then

    2 bowling nights will cost = 15 x 3

    2 bowling nights will cost = 45$

    3 meals will cost = 20 x 3

    3 meals will cost = 60 $

    Total = 45 + 60 = 105 $

    That is more than the income. So, it is concluded that Quinn has to less both the bowling and meals at restaurant.
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