I wholeheartedly agree and think it’s practically self-evident.
Here’s an excellent example from history.
For 28 years, the Berlin Wall separated East Berlin from West Berlin and was the most heavily militarized border crossing in the Western hemisphere. In 1989, during a press conference with western media, Gunther Schabowski was handed a note explaining a change in policy governing border crossing. Several discussions took place about making a show of opening the border between East and West Germany, but nobody informed Schabowski.
At the end of the press conference, he appears to have remembered the note belatedly, and read it verbatim—which was not what was intended. When asked about when the border would open, he assumed it was immediate.
The reality of course was that East Germany had no intention of opening the border, and certainly not immediately.
Within hours, the border crossing was practically buried under thousands of East Germans eager to be reunited with their families and other loved ones after 28 years on the press conference, which had been broadcast live.
The East Germans believed what they were told: Schabowski said immediately, and they intended to go immediately.
Border guards kept calling for instructions, until finally, they relented.
Perception became reality, and the border between East and West Berlin opened, spelling the de facto end of the separation of Germany.
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Related Questions (More Answers Below)
When supply increases, the supply curve shifts to the right.
<h3>What is the supply curve?</h3>
This is the curve that is used to show the amount of goods that the producers would be able to make available for the market at a particular price. The supply curve shifts to the right when there is an increase in supply in the economy.
Hence this answers our question by saying that When supply increases, the supply curve shifts to the right.
Read more on supply curve here: brainly.com/question/11717727
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According to the scale, an average person would posses the mean of 100 IQ <span>and standard deviation of 15. If to be a member of mensa one should have </span><span>an iq at least 2.5 standard deviations above average, the minimum iq should be:
</span>
2.5 = (x-100)/15
x = 137.5 >>>>> Less than 1% population belong to this IQ group or higher.
Answer:
Normal good
Explanation:
Income effect Is change in quantity demanded when the consumers purchasing power change as a result of a change in real income.
Substitution effect is when quantity demanded falls as a result of rise in price of a good which leads consumers to purchase cheaper alternatives.
A normal good is a good whose demand increases as income increases.
If the price of a normal good falls, the real purchasing power of the consumer increases and the consumer buys more of the good. Also, the consumer substituites from more expensive alternative goods to the more cheap normal good. The income and substitution effect both move in the same direction.
Answer:
The total effect is 35 out of which income effect is 15 and substitution effect is 20.
Explanation:
Ross has an income of $1440.
The price of chocolates (Px) is $10 and donuts (Py) is $9.
The utility function is given as
U = 0.5xy
Before price rise, Budget line:
1440 = 10x + 9y,
Consumption is optimal when
0.5y / 0.5x= 1.11
y = 1.11x
Substituting in budget line,
1440 = 10x + 9y = 10x + 9(1.11x)
1440 = 10x + 9.99x
19.99x = 1440
x = 72
y = 1.11x = 79.92 = 80
After price rise,
Py = 16.
New budget line:
1440 = 10x + 16y,
Price ratio
=
= 0.625
And,
y = 0.625x
Substituting in new budget line: 1440 = 10x + 16y
1440 = 10x + 16(0.625)x
1440 = 20x
X = 72
Y = 0.625x = 45
So, total effect (TE)
= Decrease in consumption of y
= 80 - 45
= 35
With previous (x, y) bundle,
U = 0.5xy
U = 0.5 x 72 x 80
U = 2880
Keeping utility level the same & substituting,
y = 0.625x in utility function:
28800 = 0.5xy
x = 96
Now, putting the value of x,
y = 
y = 
y = 60
Substitution effect (SE)
= 80 - 60
= 20
Income effect
= TE - SE
= 35 - 20
= 15
