but sir how can the optimal choice on the fictitious budget line be equal to the choice on the initial budget line? both are chosen at two different price situations and for any given price income situation only one consumption bundle can be chosen. These are behavioural assumptions of reveal preference. It should always lie to the right. l
@prcj82 жыл бұрын
Greetings Sir, I have a doubt ! When we draw the I.C. for the fictitious BL, how do we figure out the new I.C. ? when I read the books it seems like they are drawing it arbitrarily ! Can you please tell me how is it been drawn ?
@Cyrus08_2 жыл бұрын
Thankyou for this amazing explanation 🙏🏼
@hima34323 жыл бұрын
very helpful. thankyou sir!
@sushantakashyap60893 жыл бұрын
Sir can you tell me substitution effect is positive or negative..because in ahuja ..it has been written that substitution effect is always negative whereas it has been positive according to Jhingan and also in Salvatore.can you clarify this point sir
@nishantmehraecopoint3 жыл бұрын
SE is non positive. you look at, how changes in price and changes in demand move (when purchasing power is constant), they are moving in opposite direction. when price rises, demand falls (when purchasing power is held constant). This negative relation is what is negative Substitution effect
@sushantakashyap60893 жыл бұрын
Okay sir , that means in jhingan and in Salvatore it is not correct ..and in many books also it has been mentioned but still it leads to some confusion in me. Thank you for clearing sir ..Regards
@nishantmehraecopoint3 жыл бұрын
@@sushantakashyap6089 I don’t think these books can write anything wrong, you may have to read again carefully. May be with clarity you will understand better
@sushantakashyap60893 жыл бұрын
@@nishantmehraecopoint thank you sir
@mohsin3660 Жыл бұрын
Just to clarify By Non - positive substitution effect, it means it can be 0