A Decrease in the Price of a Good,holding Income and the Prices

question 96

Multiple Choice

A decrease in the price of a good,holding income and the prices of all other goods constant,is associated with:

• A)a positive substitution effect since consumers increase their consumption of the good as the marginal utility per dollar of the good increases.
• B)a negative substitution effect since consumers decrease their consumption of the good as the marginal utility per dollar spent of the good decreases.
• C)the consumer purchasing fewer of all goods in the consumption bundle.
• D)a shift inward of the budget line.

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Definitions:

Willingness To Pay

The maximum amount of money a consumer is prepared to spend to obtain a good or service.

Communications Network

A system of interconnected devices or nodes that can communicate with each other to exchange data and information.

Consumer Type

A classification of individuals based on their consumption patterns, preferences, or demographic characteristics.

Willingness To Pay

The maximum amount a consumer is prepared to pay for a good or service.