Answer to Question #42540 in Other Economics for huqingke
increases by 5%, consumer’s optimal consumption bundle will change from its original bundle, because after price increase first good becomes less attractive for the customer and he will buy more of second good. So, after income increase the customer will increase consumption of the second good and decrease consumption of the first good.
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When estimating a demand function, explain why fitting a line of best fit through observed
price and quantity combinations over time is not likely to yield good estimates.