Economics 2a-c answer ++++rating A consumer is initially at point A on her original budget constraint (the thin solid line with the Xintercept and Y-intercept labeled). She experiences a change in her budget constraint and is now at point B. Her new budget constraint is shown by the dotted line. [(Y₁ + A₁)(1+1) + Y2]/Pc2 U₂ U₁ [Y₁ + A₁ + (Y₂/(1+r))]/Pel C1BC1C1a C₁ a. What appears to have been the cause of the change in her budget constraint? b. Is the substitution effect positive or negative? (draw an arrow on the graph). Show this effect c. Is the income effect positive or negative? (draw an arrow on the graph). Show this effect
Economics 2a-c answer ++++rating A consumer is initially at point A on her original budget constraint (the thin solid line with the Xintercept and Y-intercept labeled). She experiences a change in her budget constraint and is now at point B. Her new budget constraint is shown by the dotted line. [(Y₁ + A₁)(1+1) + Y2]/Pc2 U₂ U₁ [Y₁ + A₁ + (Y₂/(1+r))]/Pel C1BC1C1a C₁ a. What appears to have been the cause of the change in her budget constraint? b. Is the substitution effect positive or negative? (draw an arrow on the graph). Show this effect c. Is the income effect positive or negative? (draw an arrow on the graph). Show this effect
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 3SQP
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