Please answer the questions arises when a price changes because consumers have an incentiv to1. Theconsume less of the good with a relatively higher price and more of the good with a relativ lylower price.a. income effectb. substitution effectc. backward-bending supply curved. preferences effect2. The termdescribes a situation where acauses a reductionin the buying power of income, even though actual income has not changed.a. substitution effect; lower priceb. intertemporal budget; higher pricec. income effect; higher priced. intertemporal budget; lower price3. The termrefers to the additional utility prov ided by one additional unitof consumption.a. utility b. marginal utility c. added utilityd. Giffen utiliy4. Total utility is defined as thea. change in marginal utility a person derives from the consu mption of a good.b. change in total utility a person derives from the consumpt or of a gooddivided by the price of that good.c. change in total utility a person derives from the consump ion of a good dividedby the change in the consumption of that good.d. sum of the amounts of satisfaction a person receives fror i consuming a good.e. change in total utility a person derives from the consumf tion of a good.15. Marginal utility is defined as thea. change in marginal utility a person derives from the coi isumption of a good.b. change in total utility a person derives from the consun ption of a gooddivided by the price of that good.c. change in total utility a person derives from the consum ption of a good dividedby the change in the quantity of the good consumed.d. sum of the amounts of satisfaction a person receives fror.1 con: uming a good.e. change in total utility a person derives from the consumpiion ofa gooddivided by the value in use of that good.

Option B ie Substitution Effect When price of good rises, a consumer substitutes it for the cheaper…

1. The consume less of the good with a relatively higher price and more of the good with a relativ ly lower price. arises when a price changes because consumers have an incentive to a. income effect b. substitution effect c. backward-bending supply curve d. preferences effect 2. The term describes a situation where a causes a reduction in the buying power of income, even though actual income has not changed. a. substitution effect; lower price b. intertemporal budget; higher price c. income effect; higher price d. intertemporal budget; lower price 3. The term refers to the additional utility prov ided by one additional unit of consumption. a. utility b. marginal utility c. added utility d. Giffen utili y

1. The consume less of the good with a relatively higher price and more of the good with a relativ ly lower price. arises when a price changes because consumers have an incentive to a. income effect b. substitution effect c. backward-bending supply curve d. preferences effect 2. The term describes a situation where a causes a reduction in the buying power of income, even though actual income has not changed. a. substitution effect; lower price b. intertemporal budget; higher price c. income effect; higher price d. intertemporal budget; lower price 3. The term refers to the additional utility prov ided by one additional unit of consumption. a. utility b. marginal utility c. added utility d. Giffen utili y

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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