Figure 21-20 -Refer to Figure 21-20.Suppose That a Consumer Is Originally at Consumer

question 77

Multiple Choice

Figure 21-20

-Refer to Figure 21-20.Suppose that a consumer is originally at point R.Then the price of good X decreases.Which of the following represents the income effect of the price decrease?

• A) the movement from point R to point S
• B) the movement from point R to point T
• C) the movement from point T to point S
• D) None of the above is correct.

---

Definitions:

Increase Quantity

A strategy or action aimed at raising the amount of goods or services produced or available.

Maximum Willingness to Pay

The highest amount a consumer is willing to spend on a good or service, reflecting the perceived value.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Rational

Related to decision-making, denotes behavior in accordance with logic or reason, where choices are made to maximize self-interest or outcome.