alleryMatch price effects: 1. Income: p. Real pay 2. Sub: q. Rival good 3. Price: r. Quantity
A1-p, 2-q, 3-r
B1-p, 2-r, 3-q
C1-q, 2-p, 3-r
D1-r, 2-p, 3-q
Answer & Solution
Correct answer: A. 1-p, 2-q, 3-r
Price changes affect quantity demanded through the purchasing power income effect and switching to rival goods via the substitution effect.
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