As the Relative Price of a Good Falls, the Substitution

question 151

Multiple Choice

As the relative price of a good falls, the substitution effect implies that people buy

• A)less of that good and less of its substitutes.
• B)less of that good and more of its substitutes.
• C)more of that good and less of its substitutes.
• D)more of that good and more of its substitutes.

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Definitions:

Fluid Intelligence

The faculty to use rational thought and address challenges in new contexts without the help of learned material.

Crystallized Intelligence

The accumulation of knowledge, facts, and skills that one acquires through education and experience, which tends to increase with age.

Interpersonal Intelligence

The ability to understand and interact effectively with others, involving skills such as empathy, communication, and understanding social cues.

Procedural Memory

A type of long-term memory that involves the recall of how to perform tasks such as walking, talking, or riding a bike, often without conscious thought.