The Substitution Effect of a Price Change

question 38

Multiple Choice

The substitution effect of a price change

• A)is equal to the income effect for normal goods.
• B)will result in the consumer buying less of a good at a lower price.
• C)will result in the consumer buying less of a good at a higher price.
• D)is equal to the income effect for inferior goods.
• E)outweighs the income effect for Giffen goods.

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Definitions:

Semantic Symbols

Signs or objects that represent something else based on convention, association, or resemblance with shared meaning within a cultural or social group.

Primacy Effect

The tendency to remember information at the beginning of a list better than the information that follows.

Recency Effect

The tendency to recall the last items in a sequence more readily than those in the middle.

Sensory Decay

The decline in the ability of a sensory system to detect or accurately interpret information over time or due to external factors.