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3. Make a diagram illustrating the effect of a change in price on a consumer’s optimal...

3. Make a diagram illustrating the effect of a change in price on a consumer’s optimal choice of goods x and y. Assume each consumer has well behaved preferences, that no consumer has kinky preferences, and that the optimal consumer choice will always be an interior solution

a. The price of good one decreases. Assume both x and y are normal.

b. The price of good one decreases. Assume good x is inferior and nongiffen.

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