Exhibit 6-31 Assume That a Consumer Is Initially in Equilibrium

question 52

Multiple Choice

Exhibit 6-31 Assume that a consumer is initially in equilibrium at point a in Exhibit 6-31.Then the price of good B falls.The movement from point a to point b represents

• A)the substitution effect
• B)the income effect
• C)the substitution effect minus the income effect
• D)the sum of the substitution and income effects
• E)the income effect minus the substitution effect

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Definitions:

Sales Revenue

The total amount of money generated from the sale of goods or services by a company before any expenses are subtracted.

Accounts Receivable

Amounts owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Direct Method

A financial accounting method that allocates service department costs directly to producing departments without intermediate allocations.

Sales Revenue

The overall sum of money made from selling products or services before deducting any costs.