At the Initial Prices, Teodoro Is a Net Seller of Apples

question 34

Multiple Choice

At the initial prices, Teodoro is a net seller of apples and a net buyer of bananas.If the price of apples decreases and the price of bananas does not change,

• A)the compensating variation must be negative and the equivalent variation positive.
• B)the compensating variation must be positive and the equivalent variation negative.
• C)both the compensating variation and the equivalent variation must be positive.
• D)both the compensating variation and the equivalent variation must be negative.
• E)the compensating variation must be negative but the equivalent variation could be of either sign.

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Definitions:

Framing Effects

The phenomenon where people's decisions and preferences can be significantly influenced by the way information, choices, or situations are presented.

Poor Affective Forecasting

The tendency of individuals to mispredict their future feelings in response to events or outcomes.

Many Options

The availability of a wide range of choices or alternatives.

Special Topping Combinations

Unique or uncommon assortments of toppings, particularly in the context of food such as pizza or ice cream.