The substitution effect A) is always larger than the price ...

[xroflmao]

The substitution effect
 
  A) is always larger than the price effect.
  B) always decreases purchases of a good as the price of a good rises.
  C) increases purchases of the good as the price rises if the good is a normal good.
  D) is always smaller than the income effect.

Question 2

If Tom's total utility from watching one more minute of television increases but the increase for each additional minute is smaller than the previous minute, he has diminishing marginal utility.
 
  Indicate whether the statement is true or false

[trampas]

Answer to Question 1

B

Answer to Question 2

TRUE