When the Price of an Inferior Good Falls,the Substitution Effect

question 33

Multiple Choice

When the price of an inferior good falls,the substitution effect contributes to a(n) _____ in the quantity demanded,and the income effect _____ the substitution effect.

• A)decrease;reinforces
• B)increase;reinforces
• C)increase;opposes
• D)decrease;opposes

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Definitions:

Developed Markets

Countries with highly industrialized economies, well-developed financial markets, and high standards of living.

Wage-related Expenses

Costs incurred by employers that are directly associated with the payment of wages to employees, including taxes, benefits, and insurance.

Socioeconomic Inequality

The disparities in income, wealth, and access to resources among different social and economic groups within a society.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, often driven by international trade and investment and aided by information technology.