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question 179

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Use the following to answer questions:
Figure: The Optimal Consumption Bundle Use the following to answer questions: Figure: The Optimal Consumption Bundle   -(Figure: The Optimal Consumption Bundle)  Look at the figure The Optimal Consumption Bundle. Which of the following could lead to an optimal consumption bundle on indifference curve I<sub>3</sub>? A)  an increase in income B)  an increase in the price of restaurant meals C)  an increase in the price of rooms D)  a decrease in income
-(Figure: The Optimal Consumption Bundle) Look at the figure The Optimal Consumption Bundle. Which of the following could lead to an optimal consumption bundle on indifference curve I3?


Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price, indicating its sensitivity to price changes.

Specific Excise Tax

A tax levied on a particular good or service, usually based on a fixed amount per unit, such as per liter of alcohol or per pack of cigarettes.

Unitary

A term in economics used to describe a situation where a change in one factor leads to a proportionate change in another factor.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.

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