ECONOMICS
SCARCITY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the cost effect
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the money effect
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the income effect
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the Vosika effect
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Detailed explanation-1: -The answer is b. inflationary effect. Inflation is a measure of the increase in a price of something. As the prices rises, less of it can be purchased with a given unit of money.
Detailed explanation-2: -An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise. These goods fall out of favor as incomes and the economy improve as consumers begin buying more costly substitutes instead.
Detailed explanation-3: -The income effect If price rises, it effectively cuts disposable income, and there will be lower demand for the good because of this fall in disposable income.
Detailed explanation-4: -The substitution effect occurs when consumers react to an increase in a good’s price by consuming less of that good and more of other goods.
Detailed explanation-5: -The substitution effect arises from the fact that people must choose between combinations of goods that fall within their budgets. If a product suddenly costs more, consumers will naturally look to buy substitute goods that are relatively cheaper.