Assume That a College Student Purchases Only Coffee and Snickers

question 15

Multiple Choice

Assume that a college student purchases only coffee and Snickers.If coffee is an inferior good and Snickers is a normal good,then the income effect associated with an increase in the price of a Snickers will result in

• A)a decrease in the consumption of Snickers and a decrease in the consumption of coffee.
• B)a decrease in the consumption of Snickers and an increase in the consumption of coffee.
• C)an increase in the consumption of Snickers and an increase in the consumption of coffee.
• D)an increase in the consumption of Snickers and a decrease in the consumption of coffee.

---

Definitions:

Least-squares Regression

A statistical method used to determine the best-fitting line through a set of points by minimizing the sum of the squares of the offsets.

Squared Deviations

The squared differences between each data point in a set and the mean of that set, used in statistical analysis to measure variance.

Contribution Margin

The amount remaining from sales revenue after variable costs are subtracted, showing what's left over to cover fixed costs and generate profit.

Sales Volume

This refers to the total number of units of a product or service sold over a specific period.