Neville, in Problem 2, Has a Friend Named Colin

question 28

Multiple Choice

Neville, in Problem 2, has a friend named Colin. Colin has the same demand function for claret as Neville, namely q = .02m - 2p, where m is income and p is price. Colin's income is $7,500 and he initially had to pay a price of $40 per bottle of claret. The price of claret rose to $80. The substitution effect of the price change

• A) reduced his demand by 80.
• B) reduced his demand by 24.
• C) increased his demand by 80.
• D) reduced his demand by 136.
• E) reduced his demand by 34.

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Definitions:

Evaluate

The process of calculating the numerical value of an expression.

Numerical Coefficient

A number that multiplies a variable in an algebraic expression, giving the term its numerical value.

Like Terms

Terms in algebraic expressions that have the same variable parts and can be combined.

Collect Like Terms

The process in algebra of simplifying expressions by combining terms that have the same variables raised to the same power.