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(Figure: Indifference Curves and Consumption Bundles) Use Figure Indifference Curves and Consumption Bundles.In the figure,the initial optimum is at a.The price of hot dogs now increases.The change in hot dog consumption due to the substitution effect is:
A) H3 to H2.
B) H3 to H1.
C) H2 to H1.
D) H1 to H2.
Indifference Curves
Graphical representations in economics showing different combinations of goods among which a consumer is indifferent.
Substitution Effect
The change in the consumption patterns of goods or services due to a change in their relative prices, holding the consumer's income constant.
Hot Dogs
Cooked sausages, traditionally beef or pork, served in a slit of a partially sliced bun, often with various condiments.
- Investigate the effects of price modifications on optimal consumer spending patterns.
- Analyze the effect that changes in goods' pricing have on the consumption rates of both complementary and alternative products.
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Learning Objectives
- Investigate the effects of price modifications on optimal consumer spending patterns.
- Analyze the effect that changes in goods' pricing have on the consumption rates of both complementary and alternative products.
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