3) Substitution & Income Effects, Normal & Inferior Goods—Discuss with appropriate diagrams. a) What is the...

Question

Question

3) Substitution & Income Effects, Normal & Inferior Goods—Discuss with appropriate diagrams.

a) What is the substitution effect?

b) What is the income effect?

c) Why do substitution and income effects typically reinforce each other when we consider normal goods?

d) Is this true for an inferior good?

Answer 1

Answer #1

Answer 2

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