The figure above shows Sam's budget line. Which of the following would result in Sam's budget line shifting leftward and not changing its slope?
A) a decline in his preferences for both gasoline and coffee
B) an equal percentage reduction in the prices of both a gallon of gasoline and a pound of coffee
C) a decrease in Sam's income
D) a fall in the ratio of the price of a gallon of gasoline to the price of a pound of coffee
C
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Which of the following transactions represents the purchase of a final good or service?
A) General Motors purchases tires from Goodyear to install on its new Chevy Suburbans. B) Aunt Matilda buys a new convection oven for her condo in Boca Raton. C) Dunkin' Donuts purchases coffee beans. D) Tiffany's buys platinum wire to use in the production of its necklaces.
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