For a consumer, her demand for one of the products is given by x1 = 0.05m-4p. Her income is $420 and the price of this product is 2$. If the price increases to 4$, please answer the following questions: 1. Please draw in the graph to show the substitution effect and income effect 2. Please calculate the substitution effect and income effect.

Economics: Private and Public Choice (MindTap Course List)
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Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter20: Consumer Choice And Elasticity
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For a consumer, her demand for one of the
products is given by x1 = 0.05m-4p. Her
income is $420 and the price of this product
is 2$. If the price increases to 4$, please
answer the following questions:
1. Please draw in the graph to show the
substitution effect and income effect
2. Please calculate the substitution effect
and income effect.
Transcribed Image Text:For a consumer, her demand for one of the products is given by x1 = 0.05m-4p. Her income is $420 and the price of this product is 2$. If the price increases to 4$, please answer the following questions: 1. Please draw in the graph to show the substitution effect and income effect 2. Please calculate the substitution effect and income effect.
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