Question
I'm wondering whether my derived and logic are correct or not pleasr help me check it. Income effect , Substitude Effect and Total for each
I'm wondering whether my derived and logic are correct or not pleasr help me check it.
Income effect , Substitude Effect and Total for each type of good.
x is each type of good
Normal good x price increase Normal good x price decrease
Normal good y price hold Normal good y price hold
total effect: ambiguos total effect: ambiguos
Inferior good x price increase Inferior good x price decrease
Normal good y price hold Normal good y price hold
total effect: (x decrease, y increase) total effect:(x decrease, y increase)
=> SUBSTITUTION effect dominate
Giffen good x price increase Giffen good x price decrease
Normal good y price hold Normal good y price hold
total effect: (x increase, y decrease) total effect:(x decrease, y increase)
=> Income effect dominate
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