When the Price of a Good Falls, Consumers Buy More

question 204

Multiple Choice

When the price of a good falls, consumers buy more of the good because it is cheaper relative to competing goods. This statement describes the

• A) consumer equilibrium effect.
• B) price effect.
• C) income effect.
• D) substitution effect.

---

Definitions:

Standard Normal

A normal distribution with a mean of zero and a standard deviation of one, commonly used in probability theory and statistics.

Random Variable

A variable whose values are outcomes of a random phenomenon and are subject to variability, characterized by a distribution.

Normal Distribution

A distribution of probabilities that is evenly spread about the mean, indicating that occurrences close to the mean are more common than those further away.

Standard Deviation

A statistic that measures the dispersion or variability of a data set relative to its mean.