Suppose that instead of wealth, the consumer starts with a bundle of goods z (not necessarily her optimal bundle), and can buy and sell goods at prices p. Suppose that all the goods are regular. Explain why (or give an example of how) the consumer's demand for good one might be higher at prices p = (p 1 , p2, ..., pn) than at prices p (assume p 1 > p1). What is required for this to happen?

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If the price of good one p1 increases from p1 to p1 the consumers demand for good one might be highe... View the full answer