Essay
Suppose the marginal rate of substitution is constant at 6 for all possible consumption bundles. Next suppose that the price of good 1 decreases, and the ratio P1/P2 is greater than 6. Show that the income and substitution effects from this price change are both zero.
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When the price of good 1 falls, the pri...View Answer
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Correct Answer:
Verified
When the price of good 1 falls, the pri...View Answer
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