If the price of muffins, a normal good you enjoy, rises, then
A) both the income and substitution effects lead you to buy fewer muffins.
B) the substitution effect which causes you to decrease your muffin consumption outweighs the income effect which causes you to increase your muffin consumption, resulting in fewer muffins purchased.
C) the income effect which causes you to decrease your muffin consumption outweighs the substitution effect which causes you to increase your muffin consumption, resulting in fewer muffins purchased.
D) the income and substitution effects offset each other but the price effect leads you to buy fewer muffins.
A
You might also like to view...
Workers in the United States were granted the legal right to engage in collective bargaining by the
A) National Labor Relations Act. B) Taft-Hartley Act. C) Landrum-Griffin Act. D) Knights of Labor Act.
Microsoft found that instead of producing a dvd player and a gaming system separately, it is cheaper to incorporate dvd playing capabilities in their new version of the gaming system. Microsoft is taking advantage of
a. Economies of Scale b. Learning curve c. Economies of Scope d. Decreasing marginal costs