Refer to the graph below. Assume the consumer has an income of $100, the price of X is $2 and the price of Y is $1. According to the graph, the substitution effect of a decrease in the price of X from $2 to $1 is equal to:  

A. 5
B. 20
C. 30
D. 25


Answer: B

Economics

You might also like to view...

Japan has a single-payer health care system in which the government provides national health insurance to all Japanese residents

Indicate whether the statement is true or false

Economics

What would make the demand for labor more elastic?

What will be an ideal response?

Economics

If each additional unit of capital increases a firm's yearly output by a smaller amount than the previous unit of capital, and other inputs are held constant, then the firm is experiencing

a. diminishing returns to scale b. negative marginal productivity of capital c. diminishing marginal productivity of capital d. capital depreciation e. diminishing marginal productivity of labor

Economics

These two countries adopted reforms that liberalized their economies during the 1960s and they eventually became two of the world's freest economies. The two economies are

a. Russia and India. b. Nigeria and Zimbabwe c. Hong Kong and Singapore d. Brazil and Venezuela

Economics