For Two Goods Which Are Perfect Complements,the Substitution Effect of a Price

question 54

Multiple Choice

For two goods which are perfect complements,the substitution effect of a price decrease is:

• A)positive.
• B)negative.
• C)zero.
• D)one.

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Definitions:

Government Failure

A situation where government intervention in the economy causes inefficiencies or leads to an allocation of resources worse than the free market.

Competitive Markets

Markets where multiple sellers and buyers interact under the principles of supply and demand to determine prices and output without significant restrictions or monopolies.

Property Rights

Legal rights to possess, use, and dispose of assets such as land, buildings, or intellectual property.

Efficient Allocation

Efficient allocation involves the distribution of resources in a manner that maximizes productivity and utility, often considered optimal in economic theory.