pubsec-darkanstops1

pubsec-darkanstops1 - B orH t he s ubstitution nd i ncomee...

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BorH the substitution and income effects will pull her to work MoRt. calvin is at J under plan l ' lf we switch to plan2'he will be better onana f."; ";;;'ri":p". "","g better off puls him to work less- The steeper srope puils him to work more. we cANji rgll what wiil happen to his work hours' Deborah is.at K under plan t. lr*e r*it"h to pian i, she wiil see a paralel outward shift in her budget line, which will trigger an income "h""t l".oing her to work less. There will be no substituiion effect (because the slope hasn't changed, and she wilt woRK LESS. Bob is the toughest case, and his position is-rh";" in the rower diagram. Bob is at point E (the crossing point) under pran r. E is the point he chose-we presume that it is his tangency point between the plan I budget line and one of his indifference turn.r. Th;;i;;r".
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This note was uploaded on 10/15/2011 for the course ECON 134 taught by Professor Coiner during the Spring '11 term at Brandeis.

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pubsec-darkanstops1 - B orH t he s ubstitution nd i ncomee...

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