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yojoe102 yojoe102
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A year ago
Consider the income and substitution effects of price changes. Suppose the price of potatoes falls and we observe a decrease in an individual's purchases of potatoes. Which of the following can we infer?

▸ The income effect is negative and reinforces the substitution effect.

▸ The income effect just offsets the substitution effect.

▸ The income effect is positive and exceeds the substitution effect.

▸ The income effect is negative and outweighs the substitution effect.

▸ The substitution effect outweighs the income effect.
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Microeconomics

Microeconomics


Edition: 17th
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lewmyrlewmyr
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A year ago
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