A Change in Consumption of a Good Associated with a Change

question 107

Multiple Choice

A change in consumption of a good associated with a change in its price, with the level of utility 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:

Fleet Wide Gas Mileage

The average fuel efficiency across all vehicles within a defined fleet.

Auto Makers

Auto makers are companies engaged in the design, manufacturing, marketing, and selling of motor vehicles.

Core Inflation Rate

A measure of inflation that excludes volatile items such as food and energy, giving a clearer view of long-term inflation trends.

CPI Basket

A representative collection of goods and services used to calculate the Consumer Price Index.