The Substitution Effect and the Real-Income Effect Are Two Effects

question 89

Multiple Choice

The substitution effect and the real-income effect are two effects that happen when

• A) marginal utility increases.
• B) marginal utility decreases.
• C) total utility decreases.
• D) a price changes.
• E) total utility increases.

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Definitions:

Head Injury

Physical trauma to the head, which can lead to various levels of brain injury, ranging from mild concussions to severe brain damage.

Emotional Shock

A psychological condition arising in response to a terrifying or traumatic event, causing a strong emotional impact.

Decay Theory

A theory suggesting that memory fades due to the mere passage of time unless it is actively rehearsed.

Memory Fades

The gradual loss of the ability to recall information or experiences over time.