In workout problem 8.4, Maude thinks delphiniums and hollyhocks are perfect substitutes, one for one. If delphiniums currently cost $3 per unit and hollyhocks cost $4 per unit and if the price of delphiniums rises to $6 per unit, the income effect of the change in demand for delphiniums will be bigger than the substitution effect. there will be no change in the demand for hollyhocks. the entire change in demand for delphiniums will be due to the substitution effect. 1/3 of the change in demand will be due to the income effect. 2/3 of the change in demand will be due to the income effect.
In workout problem 8.4, Maude thinks delphiniums and hollyhocks are perfect substitutes, one for one. If delphiniums currently cost $3 per unit and hollyhocks cost $4 per unit and if the price of delphiniums rises to $6 per unit, the income effect of the change in demand for delphiniums will be bigger than the substitution effect. there will be no change in the demand for hollyhocks. the entire change in demand for delphiniums will be due to the substitution effect. 1/3 of the change in demand will be due to the income effect. 2/3 of the change in demand will be due to the income effect.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 21SQ
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Transcribed Image Text:In workout problem 8.4, Maude thinks delphiniums and hollyhocks are perfect
substitutes, one for one. If delphiniums currently cost $3 per unit and hollyhocks
cost $4 per unit and if the price of delphiniums rises to $6 per unit,
the income effect of the change in demand for delphiniums will be bigger than
the substitution effect.
there will be no change in the demand for hollyhocks.
the entire change in demand for delphiniums will be due to the substitution
effect.
1/3 of the change in demand will be due to the income effect.
2/3 of the change in demand will be due to the income effect.
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