If There Is an Increase in the Price of Good

question 195

Multiple Choice

If there is an increase in the price of good Z and the quantity demanded of Z goes down, a possible explanation for this is:

• A) Z is a normal good.
• B) the substitution effect.
• C) Z is a Giffen good.
• D) both A and B are correct.

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Definitions:

Response Time

The amount of time it takes for a system or individual to react to a given stimulus or request.

Objective Function

A mathematical formula used in optimization to define the goal that needs to be achieved, usually involving minimization or maximization.

Nonsmooth Optimization

An area of optimization dealing with problems that do not have continuous derivatives, often involving abrupt changes.

Fixed-Cost Problem

An issue in budgeting or economics where costs do not change with the level of production or activity.