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Economics Homework 4 - Model (view source)
Revision as of 00:36, March 25, 2013
, 00:36, March 25, 2013If the line's slope were not negative one, then one of the goods would be preferred to the other rather than the goods' being perfect substitutes.
:The line's slope must be negative one because you must give up the exact same quantity of one good and receive the exact same quantity of the other good in order to maintain the same level of happiness.
:The line's slope must be negative one because you must give up the exact same quantity of one good and receive the exact same quantity of the other good in order to maintain the same level of happiness.
:If the line's slope were not negative one, then one of the goods would be preferred to the other rather than the goods' being perfect substitutes.
6. Describe either the "income effect" or the "substitution effect." Take your pick.
6. Describe either the "income effect" or the "substitution effect." Take your pick.