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Unformatted text preview: Explain. What are the differences in the analyses of market price and market output between the demand-supply model and the monopoly model? Explain the (Hicksian) substitution effect and the income effect under the derivation of the money-income-constant demand curve. In particular, explain why there is an income effect when money income is kept constant? Moreover, is there any definite prediction regarding the sign of the slope of the money-income-constant demand curve? If we replace the Hicksian substitution effect by the Slutsky substitution effect, would it make any difference to the derivation of the above demand curve? Is there any definite prediction regarding the sign of the slope of the money- income-constant demand curve? How about the apparent-real-income- constant demand curve? In seelungprediction, which demand curve would you prefer? Explain. - end of paper -...
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This note was uploaded on 09/06/2010 for the course FBE ECON1001 taught by Professor Dr.demurger during the Fall '08 term at HKU.
- Fall '08