Asked by
Serenity On-Phouttharath
on Dec 11, 2024
Verified
If the price of gasoline goes up, and Jacob now buys fewer candy bars because he has to spend more on gas, this would best be explained by
A) the substitution effect.
B) the income effect.
C) the highly elastic demand for gasoline.
D) all of the above.
Income Effect
That part of an increase (decrease) in amount consumed that is the result of the consumer’s real income being expanded (contracted) by a reduction (rise) in the price of a good.
Candy Bars
Candy bars are confectionery items commonly consisting of a chocolate coating or shell filled with ingredients like nuts, caramel, or nougat.
- Identify the factors influencing the price elasticity of demand for various goods and services.
- Explore the roles of income effects and substitution effects on the decisions made by consumers.
Verified Answer
MB
Learning Objectives
- Identify the factors influencing the price elasticity of demand for various goods and services.
- Explore the roles of income effects and substitution effects on the decisions made by consumers.
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