When the Price of One Good Decreases,the Associated Substitution Effect

question 71

Multiple Choice

When the price of one good decreases,the associated substitution effect is represented by a:

• A) move from one indifference to a higher indifference curve since real income is now higher.
• B) move from one indifference to a lower indifference curve since real income is now lower.
• C) move along a given indifference curve holding real income constant.
• D) move along a given indifference curve since real income increases.

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Definitions:

Past Experiences

Events or occurrences in one's life that have happened before the present time, which can influence behavior and decision-making.

Sociability

The characteristic of individuals or groups to seek social interaction, company, and engagement with others.

Motivation

The internal drive or external incentive that prompts individuals to act in a certain way to achieve goals.

Adjustment

A change or modification made to correct, improve, or adapt something to a particular situation or condition.