The Real-Income Effect of a Price Change Is Most Significant

question 29

Multiple Choice

The real-income effect of a price change is most significant when

• A) the substitution effect is insignificant.
• B) the substitution effect is significant too.
• C) the good under consideration constitutes a major portion of the consumer's budget.
• D) the marginal utility per dollar spent on the last unit is high.

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Definitions:

Product Design

The process of creating and developing new products by defining their features, specifications, and aesthetics to meet customer needs and preferences.

Value Consciousness

The concern for obtaining the best quality, features, and performance of a product or service for a given price that drives consumption behavior.

Consumption Behavior

The study of how individuals select, buy, use, and dispose of goods and services.

Graduate Business Programs

Advanced academic programs offered by universities that focus on business administration, management, and specialized business disciplines at the master's or doctorate level.