The Substitution Effect Argues That a Consumer

question 278

Multiple Choice

The substitution effect argues that a consumer

• A) will always use the additional purchasing power from a price decrease to purchase more of both goods.
• B) will not purchase more of a good when its price falls.
• C) will purchase more of a good that has become relatively cheaper, and less of a good that has become relatively more expensive.
• D) will purchase less of both goods if his or her real income increases.

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Definitions:

Consideration

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Quantum Meruit

A legal principle meaning "as much as he has deserved," allowing a person to recover reasonable compensation for services or goods provided when no contract exists, or where a contract exists but precise amounts are not specified.

Relied Promise

This term does not correspond to standard legal or contractual terminology and may not be a real key term. NO.

Quantum Meruit

A Latin phrase meaning “what one has earned,” used in law to determine the amount to be paid for services rendered when no contract exists or when a contract is unenforceable.