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Suppose you buy two goods, beef and fish. As the price of beef falls relative to...

Suppose you buy two goods, beef and fish. As the price of beef falls relative to the price of fish, you buy slightly more beef than formerly. Show this behavior with indifference curves and locate your approximate position. please draw a clear picture. thank you !

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Answer #1

From the figure we can see that the budget line shifted from AB to AD which decrease in price of beef as a result the indifference curve also shifted from I1 to I2. So total change in the quantity of beef increased is B-J. Here H -J represents substitution effect where B-H represents income effect and B-J is the price effect.

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