The Change in a Consumer's Consumption of a Good in Response

question 163

Multiple Choice

The change in a consumer's consumption of a good in response to an income-compensated price change is called the:

• A) substitution effect.
• B) budget effect.
• C) demand effect.
• D) income effect.

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Definitions:

Auto-Insurance

A contract between a vehicle owner and an insurance company, where the insurer covers losses related to car accidents or theft.

Monitored Lock

A lock system that is tracked or observed to ensure its integrity, often used in security applications.

Moral Hazard

The situation where one party is more likely to take risks because another party bears the cost of those risks.

Hidden Actions

Situations in a principal-agent relationship where the agent undertakes actions that the principal cannot observe directly.