handout-3 - indicated change in the price of Y. b) Indicate...

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Handout 3: Utility Analysis In the graph below for two different goods, Y and Z, there are two of the consumer’s indifference curves, I 1 and I 2 , and two budget constraints, B 1 – the original budget constraint, and B 2 – the budget constraint after the indicated price change. Answer the following questions with respect to this information. a) Indicate the change in the quantity of Y demand per period as a result of the
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Unformatted text preview: indicated change in the price of Y. b) Indicate what portion of the change corresponds to the income effect and what part corresponds to the substitution effect. c) Is Y an inferior good? __________ Why? c) Is Z a substitute good? __________ Why? Good Z Good Y P Y ! s B 2 B 1 I 2 I 1...
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This note was uploaded on 10/26/2009 for the course ECON 180-004-20 taught by Professor Bresnock during the Fall '09 term at UCLA.

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handout-3 - indicated change in the price of Y. b) Indicate...

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