Neville, Has a Friend Named Oswald

question 29

Multiple Choice

Neville, has a friend named Oswald.Oswald has the same demand function for claret as Neville, namely q = .02m - 2p, where m is income and p is price.Oswald's income is $5,500 and he initially had to pay a price of $40 per bottle of claret.The price of claret rose to $70.The substitution effect of the price change

• A)reduced his demand by 42.
• B)reduced his demand by 60.
• C)increased his demand by 60.
• D)reduced his demand by 78.
• E)reduced his demand by 52.