The Hicks Version of the Substitution Effect of a Price

question 25

True/False

The Hicks version of the substitution effect of a price change measures the change in a consumer's demand if the consumer's income were changed just enough so the consumer would remain on the same indifference curve as before the price change.

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Definitions:

Spot Rates

The present market rate at which a currency is available for immediate purchase or sale.

Merchandise

Goods or items that a business sells to its customers.

Forward Contract

A non-standardized agreement between two parties to buy or sell an asset at a specified future time at a price agreed upon today.

Spot Rates

The current cost at which one can buy or sell a certain currency, ready for instant delivery.