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MBA, Ph.D in Management
Harvard university
Feb-1997 - Aug-2003
Professor
Strayer University
Jan-2007 - Present
Problem 12. Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2. a. Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the
price of good X only? Why?
b. Refer to Figure 21-3. Which of the graphs in the figure reflects an increase in the
price of good X only? Why?
c. Refer to Figure 21-3. Which of the graphs in the figure reflects a decrease in the
price of good Y only? Why?
d. Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the prices of both goods? Why?
e. Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous decrease in the price of good X and increase in the price of good Y? Why? 1
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