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Amara consumes scones and breakfast sandwiches. The price of a scone is $2; the price of a breakfast sandwich is $4. Suppose that with her
Amara consumes scones and breakfast sandwiches. The price of a scone is $2; the price of a breakfast sandwich is $4. Suppose that with her weekly budget of $20, she purchases four scones and two breakfast sandwiches. Her marginal utility for scones is 8, and her marginal utility for breakfast sandwiches is 16. If the price of breakfast sandwiches falls, then we would expect Amara to Multiple Choice experience greater marginal utility with each breakfast sandwich she consumes. want more breakfast sandwiches because of the income effect, but fewer because of the substitution effect. want more breakfast sandwiches because of the substitution effect, but fewer because of the income effect. purchase more breakfast sandwiches because of both the income and substitution effect
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