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:

Bilateral Promise

An agreement in which two parties make commitments to perform certain actions or obligations to one another.

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise made to a second party when the latter has reasonably relied on that promise to their detriment.

Unilateral Contracts

Unilateral contracts are agreements in which one party makes a promise in exchange for the other party's performance, not a promise of performance.

Revocation

The act of withdrawing, cancelling, or repealing a right, offer, contract, or privilege.