A Change in Consumption of a Good Resulting from an Increase

question 39

Multiple Choice

A change in consumption of a good resulting from an increase in purchasing power, with relative prices held constant, is referred to as:

• A) the income effect.
• B) the substitution effect.
• C) the wealth effect.
• D) the total effect of a price change.

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Definitions:

Punitive Damages

Compensation awarded to a plaintiff beyond actual damages to punish the defendant for egregious conduct and deter future similar acts.

Substantial Performance

A principle in contract law that allows a contracting party to be considered as having fulfilled its obligations, so long as the crucial elements of the contract have been completed, even if minor details are unfinished.

Nominal Performance

A minimal or token action that barely meets the terms of a contract, often used to avoid breaching the agreement.

Substitution

In law or economics, the act of replacing one party or element of a contract with another.