MACRO ECON 6
6th Edition
ISBN: 9780357689820
Author: MCEACHERN
Publisher: CENGAGE L
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Question
Chapter 2, Problem 7P
(a)
To determine
To graph: The
b)
To determine
The meaning of shift of PPFand the adjustments needed to be incorporated in the personal life to make such PPF shift.
c)
To determine
The reason for the outward shift of PPF and whether the shift would be parallel one.
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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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