When a Consumer Experiences a Change in Price, What Two

question 12

Multiple Choice

When a consumer experiences a change in price, what two effects do economists consider?

• A)the preference effect and the budget effect
• B)the income effect and the substitution effect
• C)the price effect and the preference effect
• D)the complement effect and the substitute effect

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Definitions:

Wage

A fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee, especially to manual or unskilled workers.

Rental Rate

The cost associated with leasing a particular commodity, property, or piece of equipment per unit time.

Marginal Product

The extra production resulting from the increase of a particular input by one unit, assuming all other factors remain constant.

Output

The total amount of goods or services produced by a company, industry, or country within a specific period.