What Is the Substitution Effect of an Increase in the Price

question 194

Multiple Choice

What is the substitution effect of an increase in the price of peaches?

• A)The change in the quantity demanded that results from a change in the price of peaches making peaches more expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power.
• B)The change in the demand for nectarines (a substitute good)that results when peaches become more expensive relative to nectarines, holding constant the effect of the price change on consumer purchasing power.
• C)The change in the quantity demanded of peaches that results from the effect of the change in the price of peaches on the consumer's purchasing power.
• D)The change in the demand for peaches that results when the price of peaches increases.

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Definitions:

Objective Standards

Criteria established by facts or law to make judgments based on unbiased benchmarks or guidelines rather than personal feelings or opinions.

Act Utilitarianism

A form of utilitarianism that evaluates the morality of actions based on the amount of happiness they produce in the outcome.

Ethical Theory

Philosophical thinking about morality, encompassing principles and guidelines that dictate what is right and wrong behavior.

Ethical Relativism

The theory that moral values and judgments are ultimately dependent on the cultural, societal, or personal context.