Neville, Has a Friend Named Algernon

question 7

Multiple Choice

Neville, has a friend named Algernon.Algernon has the same demand function for claret as Neville, namely q = .02m - 2p, where m is income and p is price.Algernon's income is $5,500 and he initially had to pay a price of $20 per bottle of claret.The price of claret rose to $50.The substitution effect of the price change

• A)reduced his demand by 60.
• B)reduced his demand by 18.
• C)reduced his demand by 102.
• D)increased his demand by 60.
• E)reduced his demand by 28.

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Definitions:

Derived Demand

Demand for a good or service that arises from the demand for another good or service.

Concert Staging Co.

Concert Staging Co. would imply a company that specializes in providing the physical setup, including stages, lighting, and sound equipment, for concert performances.

Ostrich Leathers

High-quality and durable leather made from the skin of ostriches, used in luxury fashion products.

Derived Demand

The demand for a product or service that results from the demand for another product or service.