Multiple Choice
On a consumer's indifference curve and budget constraint graph, between which two points does the income effect outweigh the substitution effect when the price of a good decreases?
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0. Basic Principles of Economics
Graphing Review
Struggling with Microeconomics?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
This graph could help an economist predict which of the following?
A
The weather patterns in a region
B
The chemical composition of a product
C
The voting behavior in an election
D
How changes in price affect the quantity demanded of a good
Verified step by step guidance1
Identify the type of graph described in the problem. Since the correct answer involves how changes in price affect quantity demanded, the graph is likely a demand curve.
Recall that a demand curve shows the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.
Understand that by analyzing movements along the demand curve, economists can predict how quantity demanded changes when the price changes.
Recognize that this graph does not provide information about weather patterns, chemical composition, or voting behavior, as those are unrelated to price and quantity demanded.
Conclude that the graph helps predict consumer behavior in response to price changes, which is fundamental in microeconomics for understanding market demand.
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