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Bob's utility function is u(x1, x2) = 3x1 + x2, and he has income m = 10. The price of good 2 is p2 = 1. Let p1 denote the initial price of good 1, and let p′1 denote a new lower price of good 1, so p′1 < p1.
(a) For what values (if any) of p1 and p′1 is the substitution effect on good 1 equal to zero?
(b) For what values (if any) of p1 and p′1 is the income effect on good 1 equal to zero?
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What would likely happen to overall economic growth if everybody made the same wage no matter what they did? What does this tell us about income inequality
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Demand and supply situations in perfectly competitive market for unskilled labor are as follows, Estimate the industry equilibrium price or output combination both graphically and algebraically.
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