Which of the Following Is True Concerning the Substitution Effect

question 33

Multiple Choice

Which of the following is true concerning the substitution effect of a decrease in price?

• A) It will lead to an increase in consumption only for a normal good.
• B) It always will lead to an increase in consumption.
• C) It will lead to an increase in consumption only for an inferior good.
• D) It will lead to an increase in consumption only for a Giffen good.

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Definitions:

Developmental Permanence

The concept that certain developmental milestones or effects, once achieved or established, will remain stable over time.

Sensory Store

A component of memory that briefly holds incoming sensory information from the environment, allowing the brain to process it.

Three-System Model

A psychological framework that divides the cognitive processes into three systems: the behavioral, cognitive, and emotional systems.

Information Processing Approach

A cognitive psychology theory that likens human thinking to the operation of a computer, focusing on how information is received, processed, stored, and retrieved.