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#4-3-the-investment-opportunity-set #cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-5-consumer-equilibrium #study-session-4
The effect of an increase in income when both goods are normal is to increase the consumption of both.
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5. CONSUMER EQUILIBRIUM: MAXIMIZING UTILITY SUBJECT TO THE BUDGET CONSTRAINT
it 12 indicates such a shift and shows how the consumer would respond, in this case, by buying more of both bread and wine. Exhibit 12. The Effect of an Increase in Income on a Normal Good Note: <span>The effect of an increase in income when both goods are normal is to increase the consumption of both. As we discovered, there is no restriction that the purchase of every good must respond to an increase in income with an increase in quantity. There, we defined


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