To have no substitution bias, what shape would the demand curve need to be for the products in the market basket? To have no substitution bias, the demand curves for the products in the market basket would need to be .

Vertical

Explanation:

To have no substitution bias, what shape would the demand curve need to be for the products in the market basket? To have no substitution bias, the demand curves for the products in the market basket would need to be vertical.

The substitution effect holds that as the price of one good falls, it becomes relatively less expensive. Therefore, assuming other alternative products stay at the same price, at lower prices the good appears cheaper, and consumers will switch from the expensive alternative to the relatively cheaper one. HENCE IN ACCORDANCE TO THE LAW OF DEMAND, THE DEMAND CURVE WILL BE DOWNWARD SLOPING AS DEMAND FALLS FOR THE GOOD WITH INCREASE IN ITS PRICE.

However, if there is no substitution bias, if we ignore the substitution effect; it will mean that the quantity demanded will not change and customers will not switch to cheaper goods, when the price a good increases.

HENCE, WITH CONSTANT DEMAND AS PRICE INCREASES, THE DEMAND CURVE WILL BE VERTICAL

hi : ) i found this so i hope this !

"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"

answer; ///pegged exchange rate with the united states;