Which of the Following Statements Is True About the Substitution

question 162

Multiple Choice

Which of the following statements is true about the substitution and income effects of an increase in the price of a good?

• A)The net effect of the substitution and income effects results in a decrease in the quantity demanded of the good.
• B)Both the substitution and income effects predict that the quantity demanded of the good increases.
• C)The substitution effect predicts that the quantity demanded of the good increases, but the income effect predicts that the quantity demanded of the good decreases.
• D)The substitution effect predicts that the quantity demanded of the good decreases, but the income effect predicts that the quantity demanded of the good increases.
• E)Neither the substitution effect nor the income effect provides any prediction about changes in the quantity demanded of the good.

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Definitions:

Behavior Modification Techniques

Strategies used to alter an individual's behaviors through reinforcement, punishment, and other learning principles.

Genetic Factors

Components of an individual's genetic makeup that influence various traits, including physical characteristics, behaviors, and susceptibility to certain diseases.

Childhood Memories

Recollections of past events that occurred during one's childhood, often influencing one's personality, behaviors, and perceptions in adulthood.

Respondent Behavior

A type of behavior that occurs as an automatic response to a specific stimulus, typically conditioned through association.