Use the Following to Answer Questions

question 20

Multiple Choice

Use the following to answer questions:
Figure: Music and Movie Downloads 5
-(Figure: Music and Movie Downloads 5) Refer to the figure. The consumer in this diagram is initially optimizing consumption at point A than moves to point B. The substitution effect of the price change causes the consumer to:

• A) reduce the number of music downloads by 3.
• B) reduce the number of music downloads by 4.
• C) increase the number of music downloads by 1.
• D) increase the number of music downloads by 3.

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Definitions:

Countertrade

A method of trade in which goods or services are exchanged for other goods or services rather than for money.

Equivalent Amount

A value or quantity that corresponds or is considered equal in value, function, or significance to another in a different context or format.

Philippine Corn

A major agricultural crop in the Philippines, important both for domestic consumption and as a component of the country's agricultural exports.

Tariffs

Government taxes on products or services entering a country that primarily serve to raise prices on imports.