Microeconomics

Indifference Curves for Burgers and CokeBurgers and coke ar two types of food which be commonly consumed by people today because of its popularity . An quietude bender below is presented in to show the combination of burgers and coke that is consumed by a hypothetical individual , Smith , if there is an annex in the monetary value of burgers . It is assumed , likewise , that Smith aims to maximise the satisfaction after the price increase .

Likewise , the discussion of the income and substitution effects of the price change is included to bear a holistic understanding of the two goodsIn this figure , the pilot program level of consumption for burgers forward the price increase is at B1 and the corresponding consumption of coke is also shown according to the rootage that is respective of the point However , the change in price of the good would lead to the concept of a new indifference curve which shifts to the left of the original indifference curve , L1 , to the creation of a new one , which is shown as L2 in the diagramThere are two respective concepts that are seen here , which are the income and substitution effect . The income effectindicates that a lower price increases the purchasing mightiness of a buyer s money income , enabling the buyer to secure more of the product than she or he could buy before [and] a higher price has the opposite effectThe income effect is shown in the graph to be the movement from the...If you want to get a full essay, order it on our website: Orderessay

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