The Substitution Effect of a Price Change Is Depicted by a

question 229

Multiple Choice

The substitution effect of a price change is depicted by a

• A)movement along the budget constraint holding satisfaction constant.
• B)shift in the budget constraint at the old prices.
• C)movement along the consumer's new indifference curve at the new prices.
• D)movement along the original indifference curve to the point where the marginal rate of substitution equals the price ratio for the new set of prices.

---

Definitions:

Cash Disbursements

The outflow of cash for expenses, purchases, or investments by a business, recorded in the cash disbursements journal.

Manufacturing Overhead Budget

An estimate of the total costs associated with the indirect production activities, excluding direct materials and direct labor, for a certain period.

Direct Labor-Hour

A measurement unit for the amount of work or labor force contribution directly involved in manufacturing a product, typically expressed in hours.

Predetermined Overhead Rate

An estimated overhead rate calculated before the accounting period begins, used to allocate overhead costs to products or services.