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Explain the Income and Substitution Effects

question 28

Essay

Explain the income and substitution effects.


Definitions:

Mill

A facility for processing raw materials; historically refers to factories for grinding grain into flour.

Emotions

Complex psychological states that involve three distinct components: a subjective experience, a physiological response, and a behavioral or expressive response.

Intentionality

The property of being directed toward some object or situation in the world (a characteristic of mental states such as emotions or beliefs).

Consciousness

Mental awareness (not to be confused with conscience).

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