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A consumer spends all her income on the two goods A and B. The quantity of good A bought is determined by the demand function QA = f(PA, PB,M) where PA and PB are the prices of the two goods and M is real income. A change in the price of A will also affect real income M via the function M = g(PA, PB, £M) where £M is money income. Derive an expression for the total effect of a change in PA on Q

A consumer spends all her income on the two goods A and B. The quantity of good A bought is determined by the demand function QA = f(PA, PB,M) where PA and PB are the prices of the two goods and M is real income. A change in the price of A will also affect real income M via the function M = g(PA, PB, £M) where £M is money income. Derive an expression for the total effect of a change in PA on Q

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A consumer spends all her income on the two goods A and B. The quantity of good A bought is determined by the demand function QA = f(PA, PB,M) where PA and PB are the prices of the two goods and M is real income. A change in the price of A will also affect real income M via the function M = g(PA, PB, £M) where £M is money income. Derive an expression for the total effect of a change in PA on QA.

 

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