Suppose a Consumer Can Purchase Only Two Goods, Beef and Chicken

question 70

Multiple Choice

Suppose a consumer can purchase only two goods, beef and chicken. If the price of beef falls (with all other variables held constant) , and the consumption of chicken increases, we can conclude that the increased consumption of chicken is due to

• A) a change in the consumer's preference toward chicken.
• B) the substitution effect only.
• C) the income effect only.
• D) neither the income effect nor the substitution effect.
• E) both the income effect and the substitution effect.

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Definitions:

Market Value

The up-to-date price at which transactions for assets or services are conducted in a marketplace.

Building Account

An account used in accounting to track the costs associated with the construction or purchase of a building.

Operating Lease

A leasing arrangement that allows for the use of an asset without transferring ownership rights, typically treated as an operating expense in financial statements.

Long-Term Asset

An asset that is expected to provide economic benefits to a business for more than one fiscal year, such as property, plant, and equipment.