Asked by
Francisco Castillo
on Oct 14, 2024Verified
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.
Verified Answer
MR
Learning Objectives
- Acquire knowledge about the theory of quasilinear and homothetic preferences and their resulting effects.