Neville, in Problem 2, Has a Friend Named Oswald

question 3

Multiple Choice

Neville, in Problem 2, has a friend named Oswald. Oswald has the same demand function for claret as Neville, namely q = .02m - 2p, where m is income and p is price. Oswald's income is $5,500 and he initially had to pay a price of $40 per bottle of claret. The price of claret rose to $70. The substitution effect of the price change

• A) reduced his demand by 42.
• B) reduced his demand by 60.
• C) increased his demand by 60.
• D) reduced his demand by 78.
• E) reduced his demand by 52.

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Definitions:

Dilemma of Honesty

A situation where being truthful might have negative consequences or lead to a moral quandary.

Unethical Tactics

Strategies or actions that violate moral principles or professional standards, often used to gain unfair advantage or harm others.

Victim

An individual who suffers harm or loss as a result of an action, event, or situation, often without fault on their part.

Response

The reaction to a specific stimulus or set of conditions, often measured in terms of behavior, performance, or outcomes.