Exhibit a -Refer to Exhibit A. Suppose That the Consumer Must Choose

question 20

Multiple Choice

Exhibit A

-Refer to Exhibit A. Suppose that the consumer must choose between buying socks and belts. Also, suppose that the consumer's income is R1 000. Suppose that the price of a pair of socks has falls from R50 to R20. The income effect is represented by the movement from point?

• A) Y to point X.
• B) X to point Z.
• C) X to point Y.
• D) Z to point X.

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Definitions:

Negative Externalities

occur when the production or consumption of goods and services imposes costs on third parties not involved in the transaction.

Underground Economy

consists of unreported income from the production of legal goods and services, either due to tax avoidance or the desire to avoid government regulations.

Gross Domestic Product

The total valuation in terms of money or market prices of all goods and services completed within a country’s borders within a specified time period.

Gross Domestic Product

Often abbreviated as GDP, Gross Domestic Product measures the total economic output of a country, including the monetary value of all goods and services produced within its borders in a specific timeframe.