Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

تمرين 1

Larsen E. Pulp,head of Pulp Fiction Publishing Company,just got some bad news: The price of paper,the company's most important input,has increased.
a. On a supply/demand diagram,show what will happen to the price of Pulp's output (novels).
b. Explain the resulting substitution and income effects for a typical Pulp customer. For each effect,will the customer's quantity demanded increase or decrease? Be sure to state any assumptions you are making.