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Unformatted text preview: o and good X is a gross substitute for good Y. x If the income effect is larger than the substitution effect, then: o the consumer will buy more of good Y o and good X is a gross complement to good Y. Household Choice in Input Markets As in output markets, households face constrained choices in input markets. Households basic decisions in input markets 1. Whether to work 2. How much to work 3. What kind of a job to work at These decisions are affected by: 1. The availability of jobs 2. Market wage rates 3. The skill possessed by the household Page 66...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.
- Fall '10