Consider the Indifference Curve Map and Budget Constraint for Two

question 29

Multiple Choice

Consider the indifference curve map and budget constraint for two goods, X and Y. Suppose the good on the horizontal axis, X, is normal. When the price of X increases, the substitution effect

• A)and income effect both cause an increase in the consumption of X.
• B)causes a decrease in the consumption of X, and the income effect causes an increase in the consumption of X. However, the substitution effect is greater than the income effect.
• C)causes an increase in the consumption of X, and the income effect causes a decrease in the consumption of X. However, the substitution effect is greater than the income effect.
• D)and income effect both cause a decrease in the consumption of X.

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Definitions:

Office Supplies Account

An account used to track expenses related to materials and supplies used in an office environment.

Adjusting Entry

At the closure of an accounting period, entries are documented to attribute earnings and outlays to the span during which they genuinely happened.

Supplies Purchased

Represents the purchase of tangible goods or materials used in the production of goods or for the operation of the company.

Accrued Revenues

Accrued revenues are revenues that have been earned but not yet received in cash or recorded, representing assets on the balance sheet.