Steve Went to His Favorite Hamburger Restaurant with $3, Expecting

Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived, he discovered that hamburgers were on sale for $1 each, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by

A) the substitution effect.
B) the income effect.
C) the price effect.
D) a rightward shift in the demand curve for hamburgers.

Correct Answer:

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