03. Demand effects decomposition

03. Demand effects decomposition - IE < 0, PE = SE + IE...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
A C B x 1 x 2 p o p n demand x 1 u o u n B n B o A C B x 1 x 2 p o p n demand x 1 u o u n B n B o A C B x 1 x 2 p o p n demand x 1 u o u n B n B o A’ C’ B’ A’ B’ C’ C’ B’ A’ A to B : substitution effect (SE) B to C : income effect (IE) A to C : price effect (PE) IE > 0 IE < 0, PE = SE + IE > 0
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: IE < 0, PE = SE + IE < 0 DECOMPOSITION OF PRICE EFFECT INTO INCOME AND SUBSTITUTION EFFECTS $ $ $...
View Full Document

This note was uploaded on 10/26/2010 for the course ECONOMICS ECON 201 taught by Professor Dr.shomubanerjee during the Summer '07 term at Emory.

Ask a homework question - tutors are online