We Are Investigating the Relationship Among Three Variables

question 116

Multiple Choice

We are investigating the relationship among three variables. We have graphed two of them. Suppose that the variable that is not measured on the x-axis or the y-axis changes. Then, there is

• A) an omitted variable.
• B) a violation of the absence of trend assumption.
• C) a shift in the plotted curve.
• D) a movement along the plotted curve.
• E) no impact on the plotted curve because the variable is not measured on either of the axes.

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Definitions:

Perfect Substitute

A perfect substitute is a good or service that can be used in exactly the same way as another, meaning consumers are indifferent between the two.

Utility Function

A mathematical representation that ranks individuals' preferences or satisfaction derived from consuming goods and services.

Utility Function

An economic model representing the preferences of an individual or entity over a set of goods and services by assigning a level of utility to each potential bundle of consumption.

Indifference Curve

A graph that shows a combination of two goods that give a consumer equal satisfaction and utility, demonstrating their preferences.