The Substitution Effect of a Price Change Leads Consumers to ________

question 115

Multiple Choice

The substitution effect of a price change leads consumers to ________ their demand for goods whose prices have risen.The income effect leads consumers to buy less of all ________ goods whose prices have risen.

• A)reduce; normal
• B)increase; inferior
• C)increase; normal
• D)reduce; Giffen
• E)reduce; complement

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Definitions:

Particular Product

A specific good or service that is distinct among others due to unique characteristics or qualities.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or taking an action.

Moving From Point

The process of going from one position or condition to another, often used in discussions about changes in economic indicators or market positions.

Perfectly Adaptable

Characterizes a scenario or system that is fully capable of adjusting seamlessly to changes or different conditions.