Which of the Following Statements About the Substitution Effect of a Price

question 229

Multiple Choice

Which of the following statements about the substitution effect of a price change is true?

• A)It is caused by a change in relative prices.
• B)It affects the consumer's ability, rather than willingness, to purchase a good.
• C)It assumes that the consumer substitutes more expensive goods for cheaper ones when income increases.
• D)It is usually equal to the income effect.
• E)It may cause the consumer to buy less of the good when its price falls.

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Definitions:

Evaluation

The systematic assessment of the value, importance, or quality of something, often for the purpose of making decisions or improvements.

Hierarchy of Effects

A model describing the stages a consumer goes through, from unawareness to the final action of purchasing, as the result of marketing activities.

Brand Name

The unique identifier, often a word or series of words, that a company uses to distinguish its products or services from those of competitors.

Important Attributes

Critical characteristics or features that determine or significantly impact the value, functionality, or appeal of a product or concept.