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:

First-Price Auctions

An auction format in which the highest bidder wins and pays the amount of their bid.

Highest Bid

The largest amount of money offered in a competitive process, such as an auction, for the purchase of goods or services.

Second Highest Bid

In an auction, the bid amount that is the next highest after the winning or highest bid.

Strategically Equivalent

Referring to actions, tactics, or strategies that yield the same outcome or effect, despite differing in approach.