Substitution and income effects paper construct a

Question

Substitution and Income Effects Paper 

Managers are very interested in how a consumer makes choice among alternatives. In this exercise, we ask you to consider the price of gasoline you may purchase to operate your automobile in any month and any alternatives available to you assuming your net income available to make those purchases. Also assume gasoline prices for your auto rose 100% during one difficult summer as our time period for the purpose of discussion. Explain, then, the following effects in terms of the income effect, or the substitution effect, or both effects:

• You drove less and purchased less gasoline.
• You ate out less often.
• You spent less to maintain your automobile.
• You took public transportation more often.
• You bought a bicycle.
• You did not take a vacation away from home.
• You bought fewer cloths and made due with more around the home.

Construct a four-to-five page APA format paper based on the above issues. Use two external sources and demonstrate your understanding of the concepts by providing a graph of each effect as a figure in your paper. 

 

Answer 1

The following task is based on Substitution and Income Effects Paper Managers are extremely interested in how a consumer makes choice among alternatives. In this exercise, we ask you to think the price of gasoline you might purchase to activate your automobile in any month and any alternatives available to you assuming your net income available to make those purchases. As well suppose gasoline prices for your auto rose 100% during one hard summer as our time period for the purpose of discussion. Give explanation, then, the subsequent consequences in terms of the income consequence, or the substitution effect, or mutually effects: • You drove less and bought less gasoline. • You ate out less often. • You spent less to sustain your automobile.