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rsbains rsbains
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Posts: 475
4 years ago

Question 1.

The increase in consumption of a good when its price falls is caused by two effects. What are these two effects? Explain the difference between these effects.



Question 2.

Figure 10-1




Refer to Figure 10-1. Which of the following statements is true?



Quantity Q0 could be a utility-maximizing choice if the price is $5.75, but quantity Q1 may not be because we have no information on the marginal utility per dollar when price changes.



Quantities Q0 and Q1 are the utility-maximizing quantities of hoagies at two different prices of hoagies.



Quantities Q0 and Q1 may not necessarily be the utility-maximizing quantities of hoagies at two different prices because we have no information on the consumer's budget or the price of other goods.



Quantities Q0 and Q1 are derived independently of the utility-maximizing model.

Textbook 
InMicro

InMicro


Edition: 1st
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rsbains Author
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4 years ago
You make an excellent tutor!
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