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Need help with # 10 please

Need help with # 10 please-example-1

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Answer:

It would be both.

Step-by-step explanation:

The income effect is the effect on real income when price changes - it can be positive and negative. As price falls, and assuming nominal income is constant, the same nominal income can buy more of the good - hence demand for this (and other goods) is likely to rise.

The substitution effect is the economic understanding that as prices rise — or income decreases — consumers will replace more expensive items with less costly alternatives.

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