A Decrease in the Price of a Good,holding Income and the Prices

question 96

Multiple Choice

A decrease in the price of a good,holding income and the prices of all other goods constant,is associated with:

• A)a positive substitution effect since consumers increase their consumption of the good as the marginal utility per dollar of the good increases.
• B)a negative substitution effect since consumers decrease their consumption of the good as the marginal utility per dollar spent of the good decreases.
• C)the consumer purchasing fewer of all goods in the consumption bundle.
• D)a shift inward of the budget line.

---

Definitions:

Activity Costs

Expenses associated with specific activities within a manufacturing or service delivery process, including labor, materials, and overhead.

Flexed

Adjusted to reflect a change in the level of activity or volume, often used in budgeting to show how costs vary with different levels of output.

Standard Costing System

A cost accounting method that assigns expected costs to products in order to estimate the cost of production and help with budget planning.

Direct Labour Hours

The total hours worked directly on a specific job or task by employees, often used to allocate labor costs to products or services.