4. The price of cheese rises from $6 to $10 per kilogram, while the price of wine remains $3 per glass. For a consumer with a constant income of $3000, show what happens to consumption of wine and cheese if they are both normal goods. Decompose the change into income and substitution effects
4. The price of cheese rises from $6 to $10 per kilogram, while the price of wine remains $3 per glass. For a consumer with a constant income of $3000, show what happens to consumption of wine and cheese if they are both normal goods. Decompose the change into income and substitution effects
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:4. The price of cheese rises from $6 to $10 per kilogram, while the price of wine remains $3 per
glass. For a consumer with a constant income of $3000, show what happens to consumption of
wine and cheese if they are both normal goods. Decompose the change into income and
substitution effects
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