Refer to the Graph Below

question 100

Multiple Choice

Refer to the graph below. In the 1980s, digital publishing reduced the cost of producing books. Assuming no change in the cost of producing DVDs, which of the shifts reflects this change in technology?

• A) I
• B) II
• C) III
• D) IV

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Definitions:

Bundles

Combinations of goods and services offered together as a single package, often at a discounted price.

Weak Axiom

A principle in consumer theory that if a consumer prefers bundle A over bundle B when both are affordable, they will not choose B over A when income or prices change, holding everything else constant.

Strong Axiom

Often refers to the strong axiom of revealed preference in economics, a principle used to infer a consumer's complete preference ordering over goods.

Revealed Preference

A theory suggesting that the preferences of consumers can be understood from their purchasing habits and choices.