Income and Substitution Effects

* What are Income and Substitution Effects? * How do they work? * How do they add up to the total price effect? 8-(:-)

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Category:

Education

Tags:

• educational
• economics
• tutorial
• income
• substitution
• effects
• motion
• graphics
• vibedu

[ikea246]

why is Z not on the same indifference curve as A? looks like you made a mistake according to Pindyck and Rubinfeld

[humanzeeben]

@ikea246 The model you are describing is the Hicks model of the substitution effect where the budget line is rolled around the original indifference curve. The model I describe is the Slutsky model where the budget line is pivoted around the original consumption bundle. Check Hicksian demand on wikipedia if you need more info. Thanks for watching!

[lwara]

What the music is for$ Is that educational too? Please do us a favor and get rid of it.

[humanzeeben]

wow. Didn't know the 20's music would generate this much animosity. I'll tone it down.

[seanch84]

I like the music.

[helmfer]

This is all confusing and distracting it helps nothing for dummies and for the iniciated, it is useless.

[itskovu]

@humanzeeben I liked it, keep it

[axelle32]

Awesome! Lose the 50's music maybe?

[wilki249]

I liked your video; the production level was awesome! those animated diagrams are very informative in a concise manner! Good Job!

[Apolis92]

I think it is wrong. The substitution effect is the movement along the original indifference curve! It does not shift the budget line, it only changes its slope!

[cqlater]

The content is good but the music is so distracting I can't stand to watch it any longer; abandoned at 18 sec.

[LeKden8]

I don't get how you went from point A to point Z. How did you get point Z?

[mbosco1000]

Why is the compensated budget pivoted around point A?

im confused.

[ranagan9]

@humanzeeben the music is really distracting when your trying to understand what is be said. other wise the video is very helpful and thank you for taking the time to make it and make it available for all to see :)