When Price Rises,the Substitution Effect

question 37

Multiple Choice

When price rises,the substitution effect

• A)always increases consumption.
• B)increases consumption for normal goods only.
• C)decreases consumption for normal goods only.
• D)decreases consumption for inferior goods only.
• E)does none of the above.

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Definitions:

Unilateral Change

Actions taken by one party, especially by an employer regarding work conditions, without agreement from the other party, such as employees or unions.

BATNA

Best Alternative to a Negotiated Agreement; the most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached.

Bargaining Environment

The context or setting in which negotiation between parties (e.g., employers and employees) takes place, including all influencing factors.

Surface Bargaining

A form of labor negotiation where parties go through the motions of bargaining without any real intention to reach agreement, often to fulfill legal obligations.