EBK ECON MICRO
6th Edition
ISBN: 9781337671828
Author: MCEACHERN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 14, Problem 12P
To determine
The Limitations challenging the rational economic decision making.
Concept Introduction:
Rational decision making is when people take a logical decision between choices available to gain maximum satisfaction in return.
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(d) Calculate the total change in qı.
Total change:
007
(sp) S
to vlijnsi
(e) B₁ is our original budget constraint and B2 is our new budget constraint after the price of good 1 (p1) increased.
Decompose the change in qı (that occurred from the increase in p₁) into the income and substitution effects. It
is okay to estimate as needed via visual inspection. Add any necessary information to the graph to support your
03
answer.
Substitution Effect:
Income Effect:
everything is in image (8 and 10) there are two images each separate questions
everything is in the picture (13)
the first blank has the options (an equilibrium or a surplus)
the second blank has the options (a surplus or a shortage)
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