Derive graphically the substitution and income effects of a price increase in an EOG - X coordinate system if X is a normal; inferior but not Giffen; Giffen good. Do the same for a price decrease. Using an X - Y coordinate system, derive the substitution and income effects graphically when X and Y are perfect complements and the price of good X decreases. Do not forget to label the axes, the budget lines, the total, the substitution, and the income effects in your graph.

Derive graphically the substitution and income effects of a price increase in an EOG - X coordinate system if X is a normal; inferior but not Giffen; Giffen good. Do the same for a price decrease. Using an X - Y coordinate system, derive the substitution and income effects graphically when X and Y are perfect complements and the price of good X decreases. Do not forget to label the axes, the budget lines, the total, the substitution, and the income effects in your graph.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.10P

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