A maximizing consumer is endowed with gh= 20, 5h= 20 and has preferences described by the linear function d = 45. Initially i" = 2, i!= 3. Now i!= 1. Provided an Indifference Curve Analysis Diagram to illustrate and quantify the endowment, the initial bundle, the Hicksian substitution effect, the ordinary income effect and the endowment income effect as bundles E, A, B, C and D. Use arrows to clearly indicate the SE, Ordinary IE, Endowment IE and Total Effect Her SE moves her from x =________ to x = Her Ordinary IE moves her from x = to x Her Endowment IE moves her from x = ▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬

A maximizing consumer is endowed with gh= 20, 5h= 20 and has preferences described by the linear function d = 45. Initially i" = 2, i!= 3. Now i!= 1. Provided an Indifference Curve Analysis Diagram to illustrate and quantify the endowment, the initial bundle, the Hicksian substitution effect, the ordinary income effect and the endowment income effect as bundles E, A, B, C and D. Use arrows to clearly indicate the SE, Ordinary IE, Endowment IE and Total Effect Her SE moves her from x =________ to x = Her Ordinary IE moves her from x = to x Her Endowment IE moves her from x = ▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.13P

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