Gabriel Has Set Aside $150 Each Month for His Favorite

question 94

Multiple Choice

Gabriel has set aside $150 each month for his favorite activities-going to movies and going to concerts. The price of a movie ticket is $15, and the price of a concert ticket is $30. He currently goes to six movies and two concerts each month. Suppose the price of a movie ticket falls to $10 and, as a result, Gabriel decides to go to seven movies and three concerts each month. Which of the following statements is true?

• A)The substitution effect outweighed the income effect.
• B)The income effect outweighed the substitution effect.
• C)Movies must be an inferior good for Gabriel.
• D)Gabriel previously followed the income effect but now follows the substitution effect.

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Definitions:

Per Capita

A statistical measure that divides a total figure by the number of people in a population, used to give an average per person.

Water Consumption

The total volume of water used by individuals, communities, industries, or agriculture over a specified period.

Total Fertility Rate

The average number of children that would be born to a woman over her lifetime, given current birth rates.

Per Capita Consumption

The average consumption of a good or service per individual within a population.