The Price of Cereal Rises

question 116

Multiple Choice

The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behaviour is an example of

• A) a decrease in the quantity demanded of cereal because of the substitution effect.
• B) a decrease in the quantity supplied of cereal because of the substitution effect.
• C) an increase in the quantity demanded of eggs because of the income effect.
• D) an increase in the quantity supplied of eggs because of the income effect.

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Definitions:

Problem

A situation, condition, or issue that is perceived as undesirable or challenging and requires a solution.

Exit Strategy

Determining in advance how to get out of a bad decision, such as having joined a failing family business.

Problem-solving

The process of identifying solutions to specific challenges or obstacles, typically involving analytical or creative thinking.

Emotional Intelligence

The ability to understand and manage one's own emotions, as well as the emotions of others, in interpersonal relationships.