Use the Following to Answer Questions

question 68

Multiple Choice

Use the following to answer questions:
Figure: Kristin's Budget Line
-(Figure: Kristin's Budget Line) Look at the figure Kristin's Budget Line. The price of a cup of cappuccino is $3, and the price of an apple is $1. Suppose Kristin initially consumes 10 cups of cappuccino and 30 apples. Then the price of apples increases to $3 each and the price of cappuccino remains unchanged. As a result of this price change, Kristin's optimal consumption bundle is now 9 cups of cappuccino and 11 apples. If Kristin's income could be adjusted so that she could maintain her initial level of utility after the price change, she would consume more cappuccino and more apples. This reflects:

• A) a substitution effect from the price change and an income effect from the income change.
• B) the substitution effect alone.
• C) the income effect alone.
• D) neither a substitution nor an income effect.

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Definitions:

Big Five Trait Dimension

A model used to describe human personality through five broad dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Agreeableness

A characteristic of personality defined by a willingness to help others, work well together, and an inclination towards preserving harmonious social connections.

Big Five Trait Dimensions

A theory in psychology that identifies five main dimensions of personality: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Extraverted/neurotic

Personality traits where extraversion is characterized by being outgoing and social, whereas neuroticism involves a tendency toward emotional instability and anxiety.