|INSTRUCTOR DISCUSSION NOTES:
Is Wal-Mart good for you?
1.What impact does increased consumer choice have on utility? Why?
Increased choice should increase utility, all else constant.
2.What impact do reduced prices of all goods by, say, 5%, have on a consumer's budget line?
This should provide an income effect, shifting the budget line outward in a parallel shift.
3.When Wal-Mart comes to town, how does the distribution of consumer and producer surplus change? Why?
As prices fall, surplus is redistributed towards consumers.
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