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Author Question: For a normal good, the income and substitution effect work in the same direction. For an inferior ... (Read 86 times)

Davideckstein7

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For a normal good, the income and substitution effect work in the same direction. For an inferior good, the income and substitution effects work in opposite directions.
 
  Does this imply that the demand curve for an inferior good is upward sloping? Explain.

Question 2

The deadweight loss from a monopoly loss measures the inefficiency created by monopoly.
 
  Indicate whether the statement is true or false



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nmyers

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Answer to Question 1

No. As long as the income effect is smaller than the substitution effect the demand curve will still be downward sloping.

Answer to Question 2

TRUE




Davideckstein7

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Reply 2 on: Jun 29, 2018
:D TYSM


TheDev123

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Reply 3 on: Yesterday
Gracias!

 

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