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8. Using the concept of income and substitution effects, explain how you might react to each of the following: (a) You currently work 20

 

8. Using the concept of income and substitution effects, explain how you might react to each of the following: (a) You currently work 20 hours a week at $10 per hour and your employer tells you he must reduce your wage to $8 per hour. (b) The price of pizza doubles and the price of hamburgers remains constant.

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a The income effect of this situation would be that you would feel the loss of income due to the decrease in wages The substitution effect would be th... blur-text-image

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