Question: 92 O G E H e fg h P 91 Refer to the above graph to answer this question. Consider an individual with preferences over


92 O G E H e fg h P 91 Refer to the above graph to answer this question. Consider an individual with preferences over two goods---good 1 and good 2. At the initial prices and income theindividual faces the budget constraint 0F and the individual's utility maximising choice of good 1 is h units (bundle H}. Men the price of good 1 increases and the price of good 2 remains the same, the individual faces budget constraint OT and chooses to consume e units of good 1 (bundle E). Given that e = 114, f= 185, g = 221 and h = 325, the substitution effect (SE) ofthis price change on good 1 is equal to (Hint: is it positive or negative?)
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