If the Price of Lattes, a Normal Good That You

question 9

Multiple Choice

If the price of lattes, a normal good that you enjoy, falls,

• A) the income and substitution effects offset each other, but the price effect leads you to buy more lattes.
• B) both the income and substitution effects lead you to buy more lattes.
• C) the income effect which causes you to increase your latte consumption outweighs the substitution effect which causes you to reduce your latte consumption, resulting in more lattes purchased.
• D) the substitution effect which causes you to increase your latte consumption outweighs the income effect which causes you to reduce your latte consumption, resulting in more lattes purchased.

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Definitions:

Reflective

Engaged in, involving, or characterized by deep thought or contemplation.

Biologically Alive

A state characterized by the capacity for growth, reproduction, functional activity, and continual change preceding death in living organisms.

Purpose

The reason for which something is done or created or for which something exists.

Iphigenia

A figure in Greek mythology, daughter of Agamemnon, whose story varies but is often associated with sacrifice for divine favor in war.