Table 10-5 -Refer to Table 10-5, Which Lists the Values of Harry

question 245

Multiple Choice

Table 10-5

-Refer to Table 10-5, which lists the values of Harry Taber's marginal utility and marginal utility per dollar for Italian submarine (sub) sandwiches and tacos.Assume that the price of a sub sandwich is $4 and the price of a taco is $2.When Harry's income is $14, he buys two Italian sub sandwiches and three tacos.The last column lists the values of the marginal utility per dollar for tacos when the price of a taco decreases to $1.Complete this statement: As a result of the change in price,

• A)Harry's purchasing power has increased. He will reduce his consumption of tacos so he can buy one more sub. This is an example of the substitution effect of a price change.
• B)Harry's purchasing power has increased. If tacos are a normal good for Harry he will buy fewer tacos. This is an example of the income effect of a price change.
• C)Harry's purchasing power has increased. If tacos are a normal good for Harry he will buy more tacos. This is an example of the income effect of a price change.
• D)Harry's purchasing power has increased. Harry buys fewer tacos. This is an example of the substitution effect of a price change

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Definitions:

Seasonal Indexes

Quantitative measures that are utilized to adjust data for seasonal variations and effects, helping in analyzing and forecasting trends.

Seasonal Indexes

Factors used to adjust or measure variations in data due to seasonal effects over specific periods, often applied in forecasting and economic analysis to account for seasonal patterns.

Regression Trend Line

is a statistical tool used in scatter plots to determine the relationship between two variables by drawing a straight line that best fits the data points.

Dependent Variable

The outcome variable in an experiment or study whose changes are determined by the presence or variation of one or more independent variables.