Franklins cartoon- 1757
revolutionary war- 1775
there is an 18 year difference
The correct answer is the following: "substitution effect and income effect".
The demand function represents the quantity of a certain good or service that consumers are willing to purchase in the market at different price levels. The law of demand states that there is an inverse relationship between price and quantity demanded (ceteris paribus, hence, given that the rest remains equal). <u>Therefore, when the price charged increases, the amount that consumers are willing to offer decreases.</u>
The variation of the quantity, due to the price variation, takes place because of the joint incidence of two effects: the effect of the variation of the relative price if compared to other goods (<u>substitution effect</u>) and the effect on the consumer's income as, if the price of a desired or purchased product has increased, the consumer's available income will decrease (<u>income effect).</u>
