Following an Income-Compensated Price Change, You Decide to Decrease the Quantity

question 9

Multiple Choice

Following an income-compensated price change, you decide to decrease the quantity of ice cream purchased each month when the price increases and purchase more frozen yogurt instead.This is an indication of the:

• A) substitution effect.
• B) utility effect.
• C) income effect.
• D) consumption effect.

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Definitions:

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise made to another party if the latter has relied on that promise to their detriment.

Stock Option

A financial instrument granting the holder the right, but not the obligation, to buy or sell a stock at an agreed-upon price within a certain period.

Detrimental Reliance

A legal principle where a party suffers harm by relying on a misleading statement or promise of another.

Bargained-for Exchange

A fundamental principle of contract law that involves a mutual exchange of value or promises between parties.