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Substitution vs Income Effect & Diminishing Marginal Utility

1) describe how a price change is affected by (a) the substitution effect, (b) the income effect.

2) If someone is very thirsty and drinks five glasses of water, describe how the principle of the diminishing marginal utility is related to drinking each glass of water.

3) describe the relationship between the ratio of marginal utility and the price of each good consumed in consumer equilibrium.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M927782

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