(Solved): Determine whether each statement describes the income effect, the substitution effect, or neither. ...

Determine whether each statement describes the income effect, the substitution effect, or neither. Assume that all other variables are held constant. a. The price of lobster doubles, making Henri feel less wealthy. As a result, Henri buys fewer lobsters. b. The price of chicken falls by $0.75 a pound. Since chicken is now relatively less expensive than ground beef, Mary buys more chicken and less beef. c. The average price of a DVD falls by 15 percent. Tom buys more DVDs because his monthly movie budget can now stretch further. d. Model Planes Incorporated reduces production of its wooden plane product line. e. Jessica sees that the price of orange juice is higher this week. She decides to buy less orange juice and more apple juice because orange juice is relatively more expensive.