The Price of Cereal Rises

question 418

Multiple Choice

The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of

• A) an increase in the quantity demanded of eggs because of the income effect.
• B) a decrease in the quantity supplied of cereal because of the substitution effect.
• C) a decrease in the quantity demanded of cereal because of the substitution effect.
• D) an increase in the quantity supplied of eggs because of the income effect.

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Definitions:

Trial-And-Error

Trial-and-error is a problem-solving method involving repeated, varied attempts which are continued until success, or until the agent stops trying.

Mechanical Solution

A solution to a problem that is derived through systematic and logical processes, often involving a physical apparatus.

Heuristic Device

A method or tool used to simplify complex decision-making processes or problem-solving activities.

Concepts

Broad concepts or perceptions that enable the categorization of items, occurrences, characteristics, or concepts that share certain similarities.