The options available are:
A. After subscription prices in the cable TV market fall, customers also purchase higher-speed Internet service.
B. Julie usually buys generic cereal because it is cheaper. One day she notices one of the brand-name products falls in price, so she decides to buy it.
C. Movie ticket prices plummet to $1, so you cancel your Netflix subscription in favor of attending movies at the theater. In addition, the cheap tickets leave you with extra money for concessions.
D. Kyle notices the cost of premium peanut butter has fallen. He considers this and then purchases less bread.
Answer:
The answers are A, B, and C
Explanation:
The options available are:
Option A. "After subscription prices in the cable TV market fall, customers also purchase higher-speed Internet service" is a perfect example of the real income effect.
Option B. "Julie usually buys generic cereal because it is cheaper. One day she notices one of the brand-name products falls in price, so she decides to buy it," is an example of the substitution effect.
While Option C. "Movie ticket prices plummet to $1, so you cancel your Netflix subscription in favor of attending movies at the theater. In addition, the cheap tickets leave you with extra money for concessions, " is an example of both the substitution and real-income effects
However, option D example "Kyle notices the cost of premium peanut butter has fallen. He considers this and then purchases less bread, " does not fit any of the substitution and real-income effects.
