When the Price of a Product Falls for a Good

question 48

Multiple Choice

When the price of a product falls for a good, the

• A)income and substitution effects will encourage consumers to purchase more of the product.
• B)income and substitution effects will encourage consumers to purchase less of the product.
• C)substitution effect will encourage consumers to purchase less of the product, and the income effect will encourage them to purchase more.
• D)substitution effect will encourage consumers to purchase more of the product, and the income effect will encourage them to purchase less.

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Definitions:

Club Good

A type of good that is excludable and non-rivalrous, meaning access can be limited by a fee or membership but one person's use does not significantly diminish availability to others.

National Public Radio

A non-profit media organization that serves as a national syndicator to a network of public radio stations in the United States.

Allocation of Resources

The process by which resources are distributed for the production of goods and services within an economy.

Government Intervention

Regulatory actions taken by a government in order to affect decisions made by individuals, groups, or organizations within its economic systems.