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

question 313

Multiple Choice

Figure 21-21
-Refer to Figure 21-21. 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.

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Definitions:

International Trade

The exchange of goods, services, and capital across international borders or territories, driven by comparative advantage.

Economic Growth

An increase in the production of economic goods and services, compared from one period of time to another.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.

Subsistence

The minimum level of essentials (such as food and shelter) necessary for an individual to survive.