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Title: The real-income effect is typically small because Post by: Hpreet796 on Mar 3, 2019 Question 1. The real-income and the substitution effects reinforce each other by• increasing the consumption of good B when the price of A falls. • decreasing the consumption of good A when the price of good A increases. • increasing the consumption of both goods A and B when income increases. • decreasing the consumption of good A when the price of good B falls. Question 2. The real-income effect is typically small because• income has no relation to consumption. • price changes tend to balance out over time. • real-incomes are always rising. • the change in price of one particular item has little effect on total purchasing power. Title: The real-income effect is typically small because Post by: Jax on Mar 3, 2019 Content hidden
Title: The real-income effect is typically small because Post by: Hpreet796 on Mar 3, 2019 Thanks for your help!
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