Assume That a College Student Purchases Only Ramen Noodles and Textbooks

question 83

Multiple Choice

Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the substitution effect associated with a decrease in the price of Ramen noodles, by itself, will result in

• A)a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles.
• B)a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles.
• C)an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles.
• D)an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.

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Definitions:

Automated Teller Machines

Electronic banking outlets that allow customers to complete transactions without the need for a branch representative or teller.

Official Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment, as officially calculated by national statistical agencies.

Discouraged Workers

Individuals who have stopped looking for employment due to the belief that there are no job opportunities available for them.

Unemployment Problem

A socioeconomic issue characterized by a high number of individuals in the workforce who are unable to find jobs.