Author Question: To separate the income and substitute effects, the imaginary budget line should be A) tangent to ... (Read 30 times)

rayancarla1 · **on:** Jul 1, 2018

To separate the income and substitute effects, the imaginary budget line should be

A) tangent to the new indifference curve and parallel to the new budget line.
B) tangent to the new indifference curve and parallel to the old budget line.
C) tangent to the old indifference curve and parallel to the new budget line.
D) tangent to the old indifference curve and parallel to the old budget line.

Question 2

Reverse auctions

A) require customers to fly at unpopular times.
B) allow firms to identify customers that have very elastic demand curves.
C) Both A and B.
D) are used to keep high paying customers from spending too little money.