The reason the substitution effect works to encourage a consumer to buy less of a product when its price increases is that
A) the real income of the consumer has been increased.
B) the real income of the consumer has been decreased.
C) the product is now relatively more expensive than it was before.
D) other products are now relatively more expensive than they were before.
Ans: C) the product is now relatively more expensive than it was before.
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People tend to "dress up" for job interviews, even though their clothes do not make them more productive in their positions. This situation is an example of
a. signaling. b. adverse selection. c. the principal-agent problem. d. moral hazard.
In the fooling model's AD/SAS/LAS diagram, short-run equilibria to the right of the LAS curve require the price level to be
A) above what workers expect. B) above what firms expect. C) below what workers expect. D) below what firms expect.
The New Keynesian model, is Keynesian in that ________
A) it assumes wages and prices are sticky B) changes in the money supply are taken to be the single most important influence on business movements C) the velocity of money is a constant D) expectations are assumed to be rational
Quantitative analysis of relevant data show that economic problems for farmers in the last half of the 19th century included:
a. falling prices of farm products relative to other prices. b. rising real interest rates. c. rising prices for consumer goods. d. rising prices for farm equipment. e. All of the above