Register
Suppose you maximize your utility by consuming 3 slices of pizza and 2 ice cream cones. The price of pizza increases. Even if you were given enough income to afford the original bundle of goods, you are
105k views
2 votes
Suppose you maximize your utility by consuming 3 slices of pizza and 2 ice cream cones. The price of pizza increases. Even if you were given enough income to afford the original bundle of goods, you are likely to choose to consume less pizza and more ice cream. Economist refer to this as the____________

User Ethanpil
by
5.9k points

1 Answer

2 votes

Answer:

substitution effect

Step-by-step explanation:

The substitution effect refers to a situation where customers will stop buying one product if its price rises, and switch to buy a cheaper product that can be a direct competitor or a substitute good. For example, if the price of coffee rises significantly, many customers may switch to buying tea.

User Dairo
by
6.2k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

6.3m questions

8.4m answers

Other Questions

One reason that businesses want to combine with other businesses is to A. avoid taxes. B. delay expenses. C. hire more workers. D. reduce expenses.
Which of the following possesses the sole power to create revenue bills?
Why do objects used as money need to be in limited supply
A business plan should generally project financial and operational aspects of the proposed business for the first a. six months. b.one year. c. three to five years. d. seven years.
Paul and Simone both work for the same accounting firm. Paul is married and has two kids and takes three allowances on his W-4 form. Simone is single and does not have any children, so she takes one allowance
Link Copied!