Determine the income and substitution effects, Macroeconomics

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Determine the income and substitution effects

Suppose the income I= 5 and the price of y is 1. A consumer's utility function is U (x, y) = x + y.

1. Illustrate the demand curve for x with Px on the vertical axis and x on the horizontal axis.

2. Determine the income and substitution effects (with respect to x) when the price of x decreases from 0.5 to 0.2

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Macroeconomics: Determine the income and substitution effects

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Macroeconomics: Determine the income and substitution effects

Reference No:- TGS0869066

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Recent Questions Asked Macroeconomics

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Request for Solution File

Ask an Expert for Answer!!

Macroeconomics: Determine the income and substitution effects

Reference No:- TGS0869066

Recent Questions Asked Macroeconomics

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