If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive,this describes the:

A) income effect.
B) substitution effect.
C) consumer surplus effect.
D) marginal-maximizing rule.

Question

Morgan Holsonback · Accepted Answer

Final Answer : B, Explanation :  This scenario describes the substitution effect, where the decrease in price of a good leads to a higher quantity demanded because consumers perceive it as a better alternative to other goods. The income effect refers to the change in quantity demanded due to a change in consumer income, consumer surplus effect relates to the difference between the maximum price a consumer is willing to pay and the actual price paid, and the marginal-maximizing rule involves purchasing goods until the marginal benefit equals the marginal cost.

If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive,this describes the:

A) income effect.
B) substitution effect.
C) consumer surplus effect.
D) marginal-maximizing rule.

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Learning Objectives

Learning Objectives

Related questions

If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive,this describes the:A) income effect.B) substitution effect.C) consumer surplus effect.D) marginal-maximizing rule.

Definitions

Learning Objectives

Learning Objectives

Related questions

If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive,this describes the:

A) income effect.
B) substitution effect.
C) consumer surplus effect.
D) marginal-maximizing rule.