Refer to the graph below. Assumethat the initial equilibrium in themarket for bus rides is point A (30rides per week). The price of bus ridesincreases and the equilibrium shifts topoint B (20 rides per week). Theincome effect of the change inconsumer behavior is the$ of otherconsumption45403530252015105TTTTTTLBCA5 10 15 20 25; 30 35 40 4526# of bus ridesper weekdecrease of consumption by 4decrease of consumption by 6increase of consumption by 6

Consumers reach an optimal choice when the marginal utility(MU) per dollar($) spent is equal for all…

graph that the initial equilibrium in the market for bus rides is point A (30 rides per week). The price of bus rides increases and the equilibrium shifts to point B (20 rides per week). The income effect of the change in

graph that the initial equilibrium in the market for bus rides is point A (30 rides per week). The price of bus rides increases and the equilibrium shifts to point B (20 rides per week). The income effect of the change in

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 6SQP

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Question

Refer to the graph below. Assume
that the initial equilibrium in the
market for bus rides is point A (30
rides per week). The price of bus rides
increases and the equilibrium shifts to
point B (20 rides per week). The
income effect of the change in
consumer behavior is the
$ of other
consumption
45
40
35
30
25
20
15
10
5
T
T
T
T
T
T
L
B
C
A
5 10 15 20 25; 30 35 40 45
26
# of bus rides
per week
decrease of consumption by 4
decrease of consumption by 6
increase of consumption by 6

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