The Change in Consumption That Results When a Price Change

question 183

Multiple Choice

The change in consumption that results when a price change moves the consumer along a given indifference curve to a point illustrating the new marginal rate of substitution is called the

• A)income effect.
• B)substitution effect.
• C)Giffen good effect.
• D)inferior good effect.

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Definitions:

Average Total Cost

The total cost of production divided by the number of units produced, providing a per-unit cost of production.

Oligopolistic Industry

A market structure characterized by a small number of firms that have the power to influence the price of their products or services.

Competitive Price Searchers

Businesses that operate in markets with many competitors and product differentiation, where they have to search for the optimal price to balance attracting customers and earning profits.