answer to sample demand exam

answer to sample demand exam - "ANSWERS" FOR...

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"ANSWERS" FOR FIRST EXAM ON DEMAND budget constraint intertemporal budget constraint transitivity present value corner solution consumer surplus price-consumption curve cross-price elasticity income effect perfectly inelastic Ken Lay's indifference curve doesn't give him much choice-- PERFECTLY ELASTIC OR CORNER SOLUTION. Not everybody in the market pays what she thinks the product is worth. CONSUMER SURPLUS Ken Lay is as happy as he can be, regardless of the price of beer. PRICE CONSUMPTION CURVE OR PERFECTLY INELASTIC A mystery without income and prices (and keeps Ken from nirvana). BUDGET CONSTRAINT This is not present when indifference curves cross. TRANSITIVITY ****************************************************************** In the following, explain each statement briefly--in two to three sentences--and or with graphs properly labeled. 1. We can be sure that the substitution effect will always be zero for goods that are complements. Since both goods are used together, a change in the price of one or the other will have no impact on one at the expense of the other A change in the price will lead to increases or decreases in the consumption of both .a diagram showing a "right angle" indifference curve, with a rotating budget line reflecting change in
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answer to sample demand exam - "ANSWERS" FOR...

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