To Separate the Income and Substitute Effects,the Imaginary Budget Line

question 115

Multiple Choice

To separate the income and substitute effects,the imaginary budget line should be

• A)tangent to the new indifference curve and parallel to the new budget line.
• B)tangent to the new indifference curve and parallel to the old budget line.
• C)tangent to the old indifference curve and parallel to the new budget line.
• D)tangent to the old indifference curve and parallel to the old budget line.

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