The graph shows Esther's best affordable point at A. The price of seeing a movie rises and Esther's new best affordable point is C. Draw a budget line that isolates the substitution effect. Label it B₂. Draw a point to indicate where Esther consumes if she faces the budget line you've drawn. Label it B. For Esther, the substitution effect is the movement from point income effect is the movement from point OA. A to point B; B to point C OB. A to point C, C to point B OC. B to point C; C to point A OD. C to point B, B to point A and the 8.0 6.0 4.0 2.0- 0.0- 0.0 2.0 C A B₂ 4.0 Maine Inar month) 6.0 1/2₂ B₁ 8.0

The graph shows Esther's best affordable point at A. The price of seeing a movie rises and Esther's new best affordable point is C. Draw a budget line that isolates the substitution effect. Label it B₂. Draw a point to indicate where Esther consumes if she faces the budget line you've drawn. Label it B. For Esther, the substitution effect is the movement from point income effect is the movement from point OA. A to point B; B to point C OB. A to point C, C to point B OC. B to point C; C to point A OD. C to point B, B to point A and the 8.0 6.0 4.0 2.0- 0.0- 0.0 2.0 C A B₂ 4.0 Maine Inar month) 6.0 1/2₂ B₁ 8.0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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