SI THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ECONOMICS SESSION 2, 2009 ,. ECONllOl MICROECONOMICS I FINAL EXAMINATION TIME ALLOWED - 2 HOURS THIS...

Which statements about the "substitution effect" is true?

a. it is the effect of a % decrease in quantity substituted equal to the % decrease in price of a commodityb. it forms the basis of the "Rational spending rule"c. it refers to the extent to which consumers of substitute commodities are better off as a result of a price changed. always causes demand for the good to increase following a decrease in the price of the good

also can you please tell m the answer of Q1-Q30