Suppose that preferences are concave.Is it still the case substitution effect is negative?
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(Figure 8.5 shows a case when the entire demand response is due to the substitution effect; that happens when the consumer switches between the two goods due to price change.) 2. Suppose that preferences are concave. ... Corner solution; substitution effect is negative or zero.
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Suppose that preferences are concave. Is it still the case that the substi-
tution effect is negative?
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