Refer to the indifference curve/budget line diagram below in Figure 7. Given that a consumer initially faces budget line (BL1) and ICI, and thus, by choosing consumption point c, is able to achieve the optimal utility level. If the price of x (Px) decreases, then the substitution effect (SE) is the movement from _-. effect (IE) is the movement from and the income y a IC2 d IC: BLI Figure 7 O a. from b to a; and a to d. O b. from a to b; and b to c. O c. No correct answwers. O d. from c to d; and d to a.
Refer to the indifference curve/budget line diagram below in Figure 7. Given that a consumer initially faces budget line (BL1) and ICI, and thus, by choosing consumption point c, is able to achieve the optimal utility level. If the price of x (Px) decreases, then the substitution effect (SE) is the movement from _-. effect (IE) is the movement from and the income y a IC2 d IC: BLI Figure 7 O a. from b to a; and a to d. O b. from a to b; and b to c. O c. No correct answwers. O d. from c to d; and d to a.
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 2CQQ
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Question
![Refer to the indifference curve/budget line diagram below in Figure 7. Given that a consumer initially faces
budget line (BL1) and ICI, and thus, by choosing consumption point c, is able to achieve the optimal utility level.
If the price of x (Px) decreases, then the substitution effect (SE) is the movement from _-.
effect (IE) is the movement from
and the income
y
a
IC2
d
IC:
BLI
Figure 7
O a. from b to a; and a to d.
O b. from a to b; and b to c.
O c. No correct answwers.
O d. from c to d; and d to a.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F151a4749-18a2-47b0-95db-518cdf3bf529%2F075c5074-9554-4562-9a4f-b46e271a36d4%2Fxa4yw8m_processed.png&w=3840&q=75)
Transcribed Image Text:Refer to the indifference curve/budget line diagram below in Figure 7. Given that a consumer initially faces
budget line (BL1) and ICI, and thus, by choosing consumption point c, is able to achieve the optimal utility level.
If the price of x (Px) decreases, then the substitution effect (SE) is the movement from _-.
effect (IE) is the movement from
and the income
y
a
IC2
d
IC:
BLI
Figure 7
O a. from b to a; and a to d.
O b. from a to b; and b to c.
O c. No correct answwers.
O d. from c to d; and d to a.
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