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Francisco Castillo
on Oct 14, 2024

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If preferences are homothetic and all prices double while income remains constant, then demand for all goods is halved.

Homothetic Preferences

Consumer preferences where if a bundle of goods is preferred to another, then any scaled up or down version of the bundle is also preferred based on the proportion of goods, maintaining consumption patterns.

Prices Double

A situation where the prices of goods or services increase to twice their original amount.

  • Acquire knowledge about the theory of quasilinear and homothetic preferences and their resulting effects.
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Madalin ReneeOct 19, 2024
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