What happens when consumers react to an increase in a good's price by consuming less of that good and more of other goods

a. elasticity of demand
b. substitution effect
c. law of demand
d. complement
e. substitute

Ans: b. substitution effect

Economics

You might also like to view...

We know that the minimum wage causes unemployment. So, why does the government impose a minimum wage?

What will be an ideal response?

Economics

When calculating the factors which have led to economic growth over the last century, technological change is calculated as:

A. the rate of change of the capital-output ratio. B. the increased productivity of capital. C. a residual, inferred as the leftover growth after accounting for the contributions of other factors. D. the ratio of the marginal products of capital and labor. E. the rate of growth of the output to land ratio.

Economics