"" Tom buys only cookies and chocolate and spends all of his income on the two items. Suppose the price of a cookie falls. Tom adjusts his optimal consumption bundle such that Tom now buys more cookies and less chocolate at his new consumer equilibrium. According to marginal utility theory, Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
a the substitution effect must have been bigger than the income effect since we observe Tom buying less chocolate.
b the substitution effect must have been bigger than the income effect since we observe Tom buying more cookies.
c. the income effect must have been bigger than the substitution effect since we observe Tom buying less chocolate.
d the income effect must have been bigger than the substitution effect since we observe Tom buying more cookies."