Make a diagram illustrating the effect of a change in price, Ask an Expert

Economics

Make a diagram illustrating the effect of a change in price on a consumer’s optimal choice given the information below. Assume each consumer has well behaved preferences, that no consumer has kinky preferences, and that the optimal consumer choice will always be an interior solution. Be sure to clearly depict both income and substitution effects in every given case.

A. The price of good one decreases. Assume good one is inferior.

B. The price of good one decreases. Assume good one is a giffen good.

Please provide a diagram and show the income effect and substitution effect within the diagram.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91929029

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