1. What would the Ns curve look like if the substitution effect
= income effect? Explain your answer.
2. Derive the Ys curve in the classical model.
3.. Derive the Yd curve in the classical model.
Use the substitution effect, scale effect, and labor demand
elasticity to explain why an increase in the wage rate for coal
miners will likely create more unemployment in the long run than in
the short run.
Use the concepts of income effect and subsitution effect to
explain why the effect on desired savings of an increase in the
expected real interest rate is potentially ambiguous. Draw
the saving curve for when (a) subsitution effect dominates (b)
income effect dominates.
I need help with the graphs.
a. The demand curve for a single product is
downsloping because of the
income and substitution effects but these effects don't apply to
the aggregate demand curve.
income and substitution effects and these effects also apply to
the aggregate demand curve.
wealth and real interest rate effects but these effects don't
apply to the aggregate demand curve.
wealth and real interest rate effects and these effects also
apply to the aggregate demand curve.
b. With the aggregate demand curve, moving...
2. An ordinary demand curve contains both substitution and
income effects, while a compensated demand curve contains only
income effects. True or False
5. The substitution and income effects are in opposition when
the price of an inferior good changes. True or False
7. Since the quantity of good X is measured along the horizontal
axis when drawing indifference curves and demand curves, both can
be drawn in the same diagram. True or False
8. When the price of a...
explain with the aid of a diagram the income and
substitution effects and use the concepts to describe what happens
when the price of a products decreases.
Using the concepts of the substitution effect, leakages, and
crowding out, discuss whether a small city like Indianapolis or a
big city like Los Angeles would benefit more from hosting the NCAA
Men’s Final Four Basketball Tournament.
17. Explain the substitution effect as it relates to the labor
supply curve. Give an example. Then explain the income effect as it
relates to the labor supply curve. Give an example.