Consider an Indifference Curve Based Around Video Games and Pizza

question 11

Multiple Choice

Consider an indifference curve based around video games and pizza. If the price of pizza falls, what would have to be true for the consumer to buy less pizza compared with when the price of pizza was higher?

• A) Pizza and video games would be perfect substitutes.
• B) The income effect would be greater than the substitution effect.
• C) Consumption would lie on the same indifference curve.
• D) The consumer would be buying as a suboptimal consumption bundle.

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Definitions:

Direct Expenses

Costs that can be directly attributed to the production of specific goods or services.

Building Cost

The total expenses involved in constructing a building, including material, labor, and other direct and indirect costs.

Allocated

The process of assigning or distributing resources or expenses to various accounts or periods.

Square Feet

A unit of area measurement equivalent to a square measuring one foot on each side, commonly used in measuring real estate and building spaces.