Suppose That Consumers' Preferences Are Well Behaved in That Properties

question 43

Multiple Choice

Suppose that consumers' preferences are well behaved in that properties 4-1 - 4-4 are satisfied.Furthermore, assume that both X and Y are normal goods and that the price of good X increases.Then, which of the following effect is known with certainty.

• A)the income and substitution effect reinforce one another leading to an overall increase in the consumption of good X.
• B)the income and substitution effect reinforce one another leading to an overall decrease in the consumption of good X.
• C)the income and substitution effect will have competing effects leading to an indeterminate impact on the consumption of good X.
• D)the income and substitution effect will reinforce one another leading to an overall increase in the consumption of good Y.

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Definitions:

Pyruvate

A critical molecule in cellular metabolism that marks the end of glycolysis and the starting point for the Krebs cycle in aerobic respiration or fermentation in anaerobic conditions.

NAD+

Nicotinamide adenine dinucleotide, a coenzyme found in all living cells that is critical in metabolic processes, particularly in redox reactions.

NADH

Nicotinamide adenine dinucleotide (NADH) serves as an electron carrier, playing a crucial role in cellular energy production during the process of oxidative phosphorylation.

Electron Transfer Phosphorylation

Process in which electron flow through electron transfer chains sets up a hydrogen ion gradient that drives ATP formation.