Substitution and Income Effect, Topics in Demand and Supply Analysis, CFA Level I, Economics
Sep 4,20Blog article 4, Substitution and Income Effect, Topics in Demand and Supply Analysis, CFA Level 1 Economics We consider the household optimum in a two-goods world.If the price of the first good rises, then the budget line turns inwards on the x1 axis. We can then distinguish between – Overall effect, – Substitution effect and – Income effect where the …
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