Consider a Consumer Who Purchases Two Goods, X and Y

question 11

Multiple Choice

Consider a consumer who purchases two goods, X and Y. If the price of good Y falls, then the substitution effect by itself will

• A)cause the consumer to buy more of good Y and less of good X.
• B)cause the consumer to buy more of good X and less of good Y.
• C)not affect the amount of goods X and Y that the consumer buys.
• D)result in an upward-sloping demand for good Y if the substitution effect is positive.

---

Definitions:

Sum of Squared Deviations

The total sum of the squared differences between each observation in a dataset and the overall mean, used as a measure of variability.

Population Variance

The variance computed for the entire population of data, representing the true variance of the data set.

Degrees of Freedom

The number of independent values in a statistical calculation that can vary without violating any constraints applied to them.

Chi-Squared Distribution

A statistical probability distribution which is the result of summing the squares of k independent standard normal variables.