In the Specific Factors Model, a 5% Increase in the Price

question 19

Multiple Choice

In the specific factors model, a 5% increase in the price of food accompanied by a 10% increase in the price of cloth will cause ________ in the welfare of labor, ________ in the welfare of the fixed factor in the production of food, and ________ in the welfare of the fixed factor in the production of cloth.

• A) an ambiguous change; an increase; a decrease
• B) a decrease; an ambiguous change; an ambiguous change
• C) an ambiguous change; an ambiguous change; an ambiguous change
• D) an ambiguous change; a decrease; an increase
• E) an increase; a decrease; an increase

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Definitions:

Routine Response Behavior

Refers to consumer purchasing decisions made out of habit without much deliberation or product comparison.

Prepurchase Behavior

The actions and processes consumers go through before making the final decision to purchase a product or service.

Problem Recognition

The first step in the consumer decision-making process, where a consumer identifies a need or problem that needs to be solved.

Alternative Evaluation

The phase in the consumer decision process where individuals assess the benefits and drawbacks of different choices available to them before making a purchasing decision.