Bob Goes Out to Dinner Three Times Per Week, Usually

question 163

Multiple Choice

Bob goes out to dinner three times per week, usually either to the local steak house or a Chinese restaurant in town. If the steak house were to raise its prices, Bob would probably (1) be less inclined to eat at the steak house and more inclined to eat at the Chinese restaurant when he did go out and (2) eat out fewer times per week because at the higher prices he cannot afford to eat out as much.

• A) Part 1 is an example of the substitution effect, part 2 of the income effect.
• B) Part 1 is an example of the income effect, part 2 of the substitution effect.
• C) Part 1 is an example of the law of diminishing marginal utility, part 2 of the substitution effect.
• D) Part 1 is an example of the proportions hypothesis, part 2 of the income effect.

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Definitions:

SPECT

A type of nuclear imaging test that shows how blood flows to tissues and organs, using a radioactive substance and a special camera.

PET

A diagnostic imaging technique that allows for the observation of metabolic processes in the body using radiolabeled substances.

Electroencephalograph

An instrument that measures and records the electrical activity of the brain.

Brain Waves

Electrical patterns of activity in the brain, measurable by EEG, that reflect different states of consciousness, sleep, and cognitive processes.