A change in the relative prices of which of the following pair of goods would likely cause the smallest substitution effect ?

Related Mcqs:

Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 Suppose that the price of a pair of socks falls from €5 to €2 The income effect is represented by the movement from point ?

A. X to point Y B. X to point Z C. Y to point X D. Z to point X...

The change in consumption that results when a price change moves the consumer along a given indifference curve is known as the ?

A. inferior effect B. normal effect C. substitution effect D. complementary effect E. income effect...

If leisure is a normal good, an increase in the wage ?

A. will always increase the quantity of labor supplied B. will increase the amount of labor supplied if the substitution effect outweighs the income effect C. will increase the amount of labor supplied if the income effect outweighs the substitution effect D. will always decrease the amount of labor supplied...

Which of the following is not true regarding the outcome of a consumer’s optimization process ?

A. The marginal utility per dollar spent on each good is the same B. The marginal rate of substitution between goods is equal to the ratio of the prices between goods C. The consumer’s indifference curve is tangent to his budget constraint D. The consumer has reached his highest indifference curve subject to his budget … Which of the following is not true regarding the outcome of a consumer’s optimization process ?Read More...

If consumption when young and when old are both normal goods, an increase in the interest rate ?

A. will always increase the quantity of saving B. will always decrease the quantity of saving C. will increase the quantity of saving if the substitution effect outweighs the income effect D. will increase the quantity of saving if the income effect outweighs the substitution effect...