Draw the income and substitution effects of price decrease

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Reference no: EM13886521

Use the figures below to answer the following questions:

(a) If the composite good costs $1, what is the price of good x in each of the three budget lines?

(b) Draw the income and substitution effects of a price decrease from the most expensive to the second most expensive on the figure above.

(c) Draw the income and substitution effects of a price increase from the lease expensive to the most expensive in the figure below.

Reference no: EM13886521

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