The graph shows Esther's best affordable point at A. The price of seeing a movie rises and Esther's new best affordable point is C. Draw a budget line that isolates the substitution effect. Label it B₂. Draw a point to indicate where Esther consumes if she faces the budget line you've drawn. Label it B. For Esther, the substitution effect is the movement from point income effect is the movement from point OA. A to point B; B to point C OB. A to point C, C to point B OC. B to point C; C to point A OD. C to point B, B to point A and the 8.0 6.0 4.0 2.0- 0.0- 0.0 2.0 C A B₂ 4.0 Maine Inar month) 6.0 1/2₂ B₁ 8.0

#51

Differentiate between cardinal and ordinal approach to consumer behaviour

You are selling $30 souvenir books for a club fund-raiser. How could you use the technique of lowballing to improve your sales?a. Start by offering the books at $70 each and pretend to bargain with customers, making $30 your “final offer.”b. Start by selling the books at $25, but once the customer has retrieved his or her checkbook, tell him or her you made a mistake and the books are actually $5 more than you thought.c.Offer the customers additional incentives to buy the book, such as free cookies with every purchase.d. Start by selling the books at $40, but tell the customer he or she will get $10 back in three weeks.

Distinguish between a rate and a price.

What will happen to the demand for ginger if scientific research proves that ginger helps to reduce diabetes.