Neville, Has a Friend Named Oswald

question 29

Multiple Choice

Neville, has a friend named Oswald.Oswald has the same demand function for claret as Neville, namely q = .02m - 2p, where m is income and p is price.Oswald's income is $5,500 and he initially had to pay a price of $40 per bottle of claret.The price of claret rose to $70.The substitution effect of the price change

• A)reduced his demand by 42.
• B)reduced his demand by 60.
• C)increased his demand by 60.
• D)reduced his demand by 78.
• E)reduced his demand by 52.

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Definitions:

Supply Chain

The network of manufacturers, suppliers, and logistics providers involved in producing and delivering a product to the end user.

Variance

A statistical measure of the dispersion showing how much the values in a data set diverge from the mean or expected value.

Wholesaler

A person or company that buys goods in large quantities from producers and sells them in smaller quantities to retailers or other wholesalers.

Retailer

A business or individual that sells goods or services directly to consumers, typically operating out of physical or online stores.