--%>
Assignment Help - homework help

problem on Substitution effect for good

One of my friend has a problem on substitution effect. The original equilibrium point (that is utility-maximizing bundle) in the graph shown below is at point A. The price of good Y is increased, pivoting the budget constraint down to its latest level.

a. Find out and clearly label the substitution effect for good Y on the graph.

b. Supposing that X and Y are both normal goods, draw an indifference curve tangent to the new, lower budget constraint.  Now Clearly indicate where the tangency point is and then label the income effect for the good Y on the graph.

   Related Questions in Microeconomics

  • Q : Profit Maximization in the Labor Markets

    I have a problem in economics on Profit Maximization in the Labor Markets. Please help me in the following question. All the profit maximizing firms will hire labor up to a point where: (1) MRP = MFC. (2) MRP = w. (3) VMP = w. (4) VMP = MFC.

  • Q : Product markets and labor markets

    Relative to firms which are price takers in both the product markets and labor markets, firms through market power in both the product markets and labor markets tend to. (1) Hire fewer workers and pay them less. (2) Rely more heavily on the screening and signaling thr

    		•
  • Q : Difference among change in

    The difference between change in supply and change in quantity supplied is as follows: (1) The change in quantity supplied is caused just by the change in the price of good, whereas a change in supply takes place whenever the ceteris paribus suppositi

    		•
  • Q : Generic calculations in elasticity

    While the temperature drops by 102o F to 54o F, just diehard surfers buy surf boards and sales plummet by 56,000 down to 14,000 monthly. For surf boards the temperature elasticity of the demand is: (w) 0.975. (x) 1.95. (y) 3.90. (z) -1.95. <

    		•
  • Q : Problem regarding Company Unions Can

    Can someone please help me in finding out the accurate answer from the following question. Unions which act primarily as tools for managers of a firm are termed as: (1) Union-busters. (2) Wildcat unions. (3) Company unions. (4) Managerial unions.

    		•
  • Q : Define Oligopoly and its characteristics

    Explain the term Oligopoly? Also explain its Characteristics?

    		•
  • Q : Labor Unions-Union membership I have a

    I have a problem in economics on Labor Unions-Union membership. Please help me in the given question. Union membership is most widespread among: (1) Supervisors and managers. (2) White collar workers. (3) Pink collar clerical workers. (4) Young, upwar

    		•
  • Q : Government rent control imposing When

    When government rent controls are imposed at R0 when demand equals D0 and then demand changes to D1, there is the: (w) quality of housing is likely to enhance. (x) housing market will be plagued through shortages. (y) price ceili

    		•
  • Q : Wage Differentials-occupational crowding

    The Disadvantaged groups have historically been pressured in the direction of low wage jobs in a process termed as: (i) Occupational crowding. (ii) Labor staggering. (iii) Systemic discrimination. (iv) Reverse favoritism. (v) Nepotism.

    Q : Price discriminate raises output and

    When a monopolist which does not price discriminate raises its output, the firm’s total revenue: (w) should rise. (x) will rise when demand is elastic. (y) will rise when demand is inelastic. (z) will rise when marginal revenue = 0.