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

question 49

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 c 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:

Drilling Rights

Legal permissions granted to an individual or company to explore and extract resources from the land.

Adjusting Entry

At the close of an accounting cycle, records are made in the accounting books to apportion earnings and expenditures to the actual period of occurrence.

Gallons

A unit of volume for liquid measurements in the United States, equivalent to 3.785 liters.

Mineral Rights

The legal rights to explore, extract, and sell minerals from a piece of land.