If the Price of Coffee Cups Falls and the Consumer

question 28

Multiple Choice

If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive,this describes the:

• A)income effect.
• B)substitution effect.
• C)consumer surplus effect.
• D)marginal-maximizing rule.

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Definitions:

GDP Deflator

An indicator for the pricing levels of all new, domestically produced, consumable goods and services within an economy.

Population

The total number of people living in a specific area or country at a given time.

Net Domestic Product

The sum of the market value of all domestically produced goods and services in a country during a given time period, subtracting the loss in value from depreciation.

Indirect Business Taxes

Taxes levied on the production, sale, or consumption of goods and services, such as sales tax or value-added tax (VAT), indirectly paid by consumers.