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Question: Mr. Alis demand function for rice is given by +m(10p)-1 where X is the amount of rice demanded. M is the income of the consumer P is the price of the rice. Originally the income of Mr Ali is ksh 48,000 per month and the price of rice is ksh 120 per kg. If the rice falls to ksh 100 per kg calculate the total effect(TE), substitution effect (SE) and the Income effect (IE) emanating from the price change. Be sure to support your response with specifics.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91810862
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