Pure Substitution effect Slutsky isolated the change in demand due only to the change in relative prices by asking" What is the change in demand when the consumer's income is adjusted so that, at the new prices, she can only just buy the original bundle? Use WarP
Pure Substitution Effect Slutsky isolated the change in demand due only to the change in relative prices by asking “What is the change in demand when the consumer’s income is adjusted so that, at the new prices, she can only just buy the original bundle?” Use WARP
Pure Substitution Effect Only
Pure Substitution Effect Only x2 x1 x2 ’ x1 ’