Discuss how the utility-maximization model helps highlight the income and

  

  1. Discuss how the utility-maximization model helps highlight the income and substitution effects of a price change. Provide an example.

2. What real-world examples do you have of the income effect? Why is it important for business managers to have a solid understanding of the income effect?

3. Why is it important for business managers to have a solid understanding of the law of diminishing marginal utility?

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