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Using the substitution and output effects explain how a decline in the price of resource A might cause an increase in the demand for substitute resource

1. Using the substitution and output effects, explain how a decline in the price of resource A might cause an increase in the demand for substitute resource B.

2. Practical Application: If automatic dishwashers and human dishwashers can be substituted for one another, and if the wage rate for dishwashers rises, what happens to the demand for automatic dishwashers according to (a) the substitution effect and (b) the output effect?

 

 

 

Apr 24 2020 View more View Less

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