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(Solved): Question 3. Provide arguments for or against the following statements: (a) fo ...



Question 3. Provide arguments for or against the following statements: (a) for normal goods the income effect resulting from???????

Question 3. Provide arguments for or against the following statements: (a) for normal goods the income effect resulting from a reduction in the own price is positive; (b) for a Giffen good a reduction in income increases the demand for that good; (c) if the demand for a good is inelastic then the total spending on that good decreases as a result of an increment in the own price.[12.5 marks]


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ANSWER:-(a) For normal goods, the income effect resulting from a reducti
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