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billyhilly billyhilly
wrote...
Posts: 353
A week ago

Question 1.

The limitation that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as



the budget constraint.



the price constraint.



economizing behavior.



maximizing behavior.



Question 2.

Which of the following correctly describes the result of a price increase for an inferior good?



The substitution effect causes the demand for the good to decrease; the income effect causes the demand for the good to increase.



Both the substitution effect and the income effect cause the consumer to buy less of the good.



The substitution effect causes the consumer to buy less of the good and the income effect causes the consumer to buy more of the good.



The substitution effect causes the demand for the good to increase; the income effect causes the demand for the good to decrease.

Textbook 

InMicro


Edition: 1st
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anuja709anuja709
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Posts: 300
A week ago
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Answer 1

the budget constraint.



Answer 2

The substitution effect causes the consumer to buy less of the good and the income effect causes the consumer to buy more of the good.

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