If the Prices of Both Goods Increase by 10 Percent

question 109

Multiple Choice

If the prices of both goods increase by 10 percent, the budget line

• A)shifts to the right in parallel fashion.
• B)shifts to the left in parallel fashion.
• C)is unaffected since only relative price changes matter.
• D)pivots on the axis of the more expensive good.

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Definitions:

Rescorla

An influential figure in psychology known for his work on associative learning and conditioning, particularly the Rescorla-Wagner model of classical conditioning.

Stimulus Discrimination

The ability to differentiate between various stimuli, responding differently based on their distinct characteristics.

Classical Conditioning

The process in which learning is achieved by regularly pairing two stimuli until a response once caused by the second stimulus becomes caused by the first stimulus.

Conditioned Stimulus

A stimulus that was once neutral but, after pairing with an unconditioned stimulus, now triggers a conditioned response.