Graph 22-7 -Refer to Graph 22-7. If the Consumer Is Currently at Consumer

question 64

Multiple Choice

Graph 22-7

-Refer to Graph 22-7. If the consumer is currently at point B on the graph shown, a change to point C as a result of a decrease in the price of potato chips would show the:

• A) price effect
• B) budget effect
• C) substitution effect
• D) income effect

---

Definitions:

Stock Split

A corporate action in which a company divides its existing shares into multiple ones to boost the liquidity of the shares, though the company's market capitalization remains unchanged.

Average Investor

A term referring to a hypothetical investor who represents the median market participant, with typical financial goals and risk tolerance.

Stock Price

The market value of a single share of a company's stock.

Marginal Tax Rate

The rate at which the next dollar of taxable income will be taxed, indicating the tax bracket into which the last dollar of income falls.