Suppose hamburger is an inferior good, but not a Giffen good, for Bob. If the price of hamburgers increases,
A) the income effect is greater than the substitution effect.
B) the income effect is smaller than the substitution effect.
C) consumption of hamburger will increase.
D) We are unable to judge the change of hamburger consumption.
B
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Economists have used the ultimatum game and the dictator game in experiments designed to determine
A) whether consumers believe it is fair for producers to raise the price of a product for which there is excess demand. B) whether consumers understand the difference between implicit costs and explicit costs. C) whether consumers understand the rule of equal marginal utility per dollar spent. D) whether consumers care about fairness when they make decisions.
Consumers often purchase products that, afterward, they regret purchasing. This can be explained by
A) consumers trying products to determine if their consumer surplus increases. B) consumers trying products to determine if firm advertising is honest. C) consumers trying to minimize expenditures. D) consumers trying to maximize choice.