Consider the change in the price of a book depicted in the above figure. The original budget line is BC. The new budget line is BD. As a result of this price change, the substitution effect can be represented by a movement from
A) point A to point E.
B) point A to point G.
C) point F to point G.
D) point A to point F.
A
You might also like to view...
Which of the following does NOT contain an externality?
A) I sell you an ice cream and you drip it all over the person sitting next to you. B) I sell you an ice cream and it gives you a headache. C) I sell you an ice cream and you share it with your friend. D) I give you an ice cream and you share it with a friend.
If the poorest 80 percent of the population receives 75 percent of the income, then the
a. richest quintile receives 20 percent of the income b. Lorenz curve lies on the diagonal c. richest quintile receives 25 percent of the income d. poorest quintile receives 25 percent of income e. poorest quintile receives 75 percent of the income
The Ability-to-pay Principle
What will be an ideal response?
A profit-maximizing producer seeks to
A. Minimize average total costs. B. Maximize profit per unit. C. Minimize marginal cost. D. Maximize total profit.