When Pepsi Becomes More Expensive Relative to Other Beverages, People

question 67

Multiple Choice

When Pepsi becomes more expensive relative to other beverages, people will purchase less Pepsi. This observation is known as the:

• A) diamond-water paradox.
• B) law of diminishing marginal utility.
• C) substitution effect.
• D) income effect.

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Definitions:

Positive Supply

A market condition where suppliers are willing to offer goods or services at a particular price level.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

Plaster

A mixture of lime, sand, water, and sometimes other materials, applied to walls and ceilings to create a smooth or decorative surface.

Labor

The effort by humans to produce goods or provide services in exchange for wages or salary.