Suppose a Consumer Can Purchase Only Two Goods,soap and Apples

question 109

Multiple Choice

Suppose a consumer can purchase only two goods,soap and apples.If the price of soap falls and the consumption of apples increases,we can conclude that the increased consumption of apples is due to

• A)neither the income effect nor the substitution effect.
• B)both the income effect and the substitution effect.
• C)the income effect only.
• D)the substitution effect only.
• E)the deflation effect.

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Definitions:

Cognitive Dissonance

The psychological unease felt when a person simultaneously maintains conflicting beliefs, ideas, or values.

Consideration Set

A group of brands or products a consumer considers as options when making a purchase decision.

Extended Problem Solving

A consumer decision-making process employed when purchasing complex or expensive products, involving extensive information gathering and evaluation.

Cognitive Dissonance

A psychological state experienced by an individual when holding two or more contradictory beliefs, ideas, or values, often resulting in discomfort and the motivation to reduce the inconsistency.