What Do the Income Effect, the Substitution Effect, and Diminishing

question 108

Multiple Choice

What do the income effect, the substitution effect, and diminishing marginal utility have in common?

• A)All are required to explain the utility-maximizing position of a consumer.
• B)They are all empirically measurable.
• C)They all help explain the upsloping supply curve.
• D)They all help explain the downsloping demand curve.

---

Definitions:

Preference

An individual's choice or inclination toward a particular option or thing over another.

Adjustment

The process of adapting or becoming accustomed to new conditions, situations, or environments.

Demands

Refers to the requirements or needs that must be met in various contexts, such as job demands in the workplace.

Environment

Environment refers to the surroundings or conditions in which a person, plant, or animal lives or operates, encompassing both natural and built settings.