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Tags
#6-revisiting-demand-function #cfa #cfa-level-1 #economics #has-images #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #study-session-4
Question
Mental exercise: Part of his response is because of the increase in [...]
We remove that effect subtracting some income, while leaving the new lower price in place.
That budget constraint shows the reduction in income that moves him back to his original indifference curve.
We remove that effect subtracting some income, while leaving the new lower price in place.
That budget constraint shows the reduction in income that moves him back to his original indifference curve.
Answer
real income.
Tags
#6-revisiting-demand-function #cfa #cfa-level-1 #economics #has-images #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #study-session-4
Question
Mental exercise: Part of his response is because of the increase in [...]
We remove that effect subtracting some income, while leaving the new lower price in place.
That budget constraint shows the reduction in income that moves him back to his original indifference curve.
We remove that effect subtracting some income, while leaving the new lower price in place.
That budget constraint shows the reduction in income that moves him back to his original indifference curve.
Answer
?
Tags
#6-revisiting-demand-function #cfa #cfa-level-1 #economics #has-images #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #study-session-4
Question
Mental exercise: Part of his response is because of the increase in [...]
We remove that effect subtracting some income, while leaving the new lower price in place.
That budget constraint shows the reduction in income that moves him back to his original indifference curve.
We remove that effect subtracting some income, while leaving the new lower price in place.
That budget constraint shows the reduction in income that moves him back to his original indifference curve.
Answer
real income.
If you want to change selection, open original toplevel document below and click on "Move attachment"
Mental exercise: Part of his response is because of the increase in real income . We remove that effect subtracting some income, while leaving the new lower price in place. That budget constraint shows the reduction in income that moves him back to his original indif
f bread falls, as indicated by the pivoting in budget constraints from BC 1 to BC 2 , Warren buys more bread, increasing his quantity from Q a to Q c . That is the net effect of both the substitution effect and the income effect. <span>Mental exercise: Part of his response is because of the increase in real income . We remove that effect subtracting some income, while leaving the new lower price in place. That budget constraint shows the reduction in income that moves him back to his original indifference curve. Notice that we are moving BC 2 inward, parallel to itself until it becomes just tangent to his original indifference curve at point b. The price decrease was a good thing for him. An offsetting bad thing would be an income reduction. If the income reduction is just sufficient to leave him no better or morse than before the price change, we have removed the real income effect of the decrease in price. What’s left of his response must be due to the substitution effect . So, we say that the substitution effect is shown by the move from point a to point b. If his
Parent (intermediate) annotation
Open itMental exercise: Part of his response is because of the increase in real income . We remove that effect subtracting some income, while leaving the new lower price in place. That budget constraint shows the reduction in income that moves him back to his original indif
Original toplevel document
Substitution effect and income effectf bread falls, as indicated by the pivoting in budget constraints from BC 1 to BC 2 , Warren buys more bread, increasing his quantity from Q a to Q c . That is the net effect of both the substitution effect and the income effect. <span>Mental exercise: Part of his response is because of the increase in real income . We remove that effect subtracting some income, while leaving the new lower price in place. That budget constraint shows the reduction in income that moves him back to his original indifference curve. Notice that we are moving BC 2 inward, parallel to itself until it becomes just tangent to his original indifference curve at point b. The price decrease was a good thing for him. An offsetting bad thing would be an income reduction. If the income reduction is just sufficient to leave him no better or morse than before the price change, we have removed the real income effect of the decrease in price. What’s left of his response must be due to the substitution effect . So, we say that the substitution effect is shown by the move from point a to point b. If his
Summary
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Details
No repetitionsDiscussion
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