Questions
AP Economics-Hillebrand AP Microeconomics Sem 1 Exam 2025 - Requires Respondus LockDown Browser
Single choice
The income and substitution effects explain which of the following?
Options
A.Decreasing marginal productivity of labor
B.The downward slope of the market demand curve
C.Market power caused by barriers to entry
D.Increasing returns to scale
E.Increasing marginal cost of production
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Step-by-Step Analysis
To approach this question, consider what the income and substitution effects describe in consumer theory.
Option 1: Decreasing marginal productivity of labor is a concept from production theory, not about how consumers respond to price changes in a demand context, so this is not explained by income and ......Login to view full explanationLog in for full answers
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