Suppose Peanut Butter Is an Inferior Good for Ilya and the Price

question 125

Multiple Choice

Suppose peanut butter is an inferior good for Ilya and the price of peanut butter rises.What will happen to Ilya's consumption of peanut butter?

• A)The substitution effect will cause an increase in the consumption of peanut butter.
• B)The substitution effect will cause a decrease in the consumption of peanut butter and the income effect will cause an increase in the consumption of peanut butter.
• C)The substitution effect will cause a decrease in the consumption of peanut butter.
• D)The income effect will cause an increase in the consumption of peanut butter.

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