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Explain substitution and income effect by citing an example
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- In this particular example, what are the contributions of the income and substitution effects?1. In your own idea, differentiate substitution effect from income effect. Give atleast 2 examples each.Pick a point on an indifference curve for wine andcheese, and show the marginal rate of substitution.What does the marginal rate of substitution tell us?
- draw a graph of indifference curves and budget line. including explain the meaning of the marginal rate of substitution of products x and y (MRSxy).I understand the substitution effect, but I really need to understand the Income effect. Please explain that and thank you in advanced ?What other factors affect the marginal utility?
