The Substitution Effect of a Price Change Is Represented by ________

question 29

Multiple Choice

The substitution effect of a price change is represented by ________.

• A) a movement along the same indifference curve
• B) a movement to a different indifference curve
• C) a change from the initial budget constraint to a new budget constraint
• D) a change in the slope of the initial budget constraint

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Definitions:

Accounting Profits

The net income of a company determined by subtracting total expenses from total revenues, according to generally accepted accounting principles.

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, representing profit beyond the normal rate of return.

Opportunity Cost

The loss of potential gain from other alternatives when one particular alternative is chosen.

Savings Account

A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.