Curve diagram and supplemental calculations

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Anqi, who has income $1,800 and utility U = XY pays PX = $45 and PY = $30.

Provide a fully labelled indifference curve diagram and supplemental calculations to illustrate the income and substitution effects associated with the introduction of a $25 per unit subsidy on Good X. Making reference to your diagram, explain how you can infer that she thinks that Good X is a normal good.

Reference no: EM131258671

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