The Price of a Good Increases Relative to Other Goods

question 17

Multiple Choice

The price of a good increases relative to other goods.Which one of the following statements must be true? The resulting

• A)income effect is negative.
• B)income effect is positive.
• C)substitution effect is negative.
• D)substitution effect is positive.
• E)income effect is zero.

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Definitions:

Contractual Obligation

A legal duty that arises out of a contract, requiring a party to either perform or refrain from performing certain acts.

Exculpatory Agreement

A clause that says one of the parties to a contract, generally the one who wrote the contract, is not liable for any economic loss or physical injury, even if that party caused the loss or injury.

Exculpatory Clause

A clause in a contract that releases a party from liability for his or her wrongful acts. These clauses are not favored by law.

Geographical Area

Refers to a specific physical region or location defined by natural or artificial borders.