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Suppose Lois Usually Buys Two Cups of Coffee for Two

Question 193

Multiple Choice

Suppose Lois usually buys two cups of coffee for two dollars each and one scone for two dollars each. If the price of scones falls to one dollar each and she now buys two cups of coffee and two scones, this illustrates the


A) substitution effect.
B) marginal rate of substitution.
C) total utility effect.
D) real-income effect.

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