Microeconomics Study Set 17
Quiz 7: Demand: Consumer Choice
A Price Change Triggers the Income Effect but Not the Substitution
A price change triggers the income effect but not the substitution effect.
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The substitution effect occurs because when the price of one good increases, consumers will buy fewer substitute goods.
The theory of bounded rationality states that it is likely for consumers to have perfect information.
One explanation for the status quo bias is an aversion to loss.
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