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Course: Microeconomics?>?Unit 2
Lesson 1: Demand- Law of demand
- Law of demand
- Market demand as the sum of individual demand
- Substitution and income effects and the law of demand
- Price of related products and demand
- Change in expected future prices and demand
- Changes in income, population, or preferences
- Normal and inferior goods
- Inferior goods clarification
- What factors change demand?
- Lesson summary: Demand and the determinants of demand
- Demand and the law of demand
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Demand and the law of demand
Problem
Emily is a rational consumer who gets utility from socks and music lessons, and she considers both of these goods normal goods. Her marginal utility from socks is utils and the price of socks is per pair. Her marginal utility from music lessons is utils and the price of music lessons is
If the price of music lessons falls to , which of the following best describes the income and substitution effects?