Suppose that Jean normally orders three tacos, but on seeing that their price has gone up, decides to buy only two. Jean's decision is best explained by:
A) income and substitution effects.
C) the principle of comparative advantage.
B) the law of supply.
D) the law of increasing opportunity costs.
Ans: A) income and substitution effects.
Economics
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A) financial intermediation (monitoring). B) financial intermediation (ownership consolidation). C) rating agencies. D) managerial compensation.
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The price elasticity of demand is a measure of the
A. relationship between price and profitability. B. sensitivity of a good's price to changes in demand. C. responsiveness of buyers of a good to changes in its price. D. effect of changes in demand on the price.
Economics