Answer to Question #130988 in Microeconomics for tooba

Question

q.4136 A consumer consume two goods X and Y.The prices of goods are Px and Py respectively. If price of good X falls,Hickshian substitution effect is greater than Slutsky substitution effect when good X is normal. True or False explan.

Answer 1

True,Hickshian substitution effect will be greater than Slutsky substitution effect when good X is normal thereby the buyer will purchase more of good X when it's price falls