For Normal Goods Which of the Following Explains Why Demand

question 473

Multiple Choice

For normal goods which of the following explains why demand curves slope downward?

• A) substitution effect and income effect
• B) substitutes and complements
• C) resources and technology
• D) prices and income

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Definitions:

Overconfidence Effect

A psychological tendency where a person's personal assurance in their decisions exceeds the actual correctness of those decisions.

Prospect Theory

A behavioral economic theory that describes the way people choose between probabilistic alternatives that involve risk, where the probability of outcomes is uncertain.

Behavioral Economists

Economists who study the effects of psychological, cognitive, emotional, cultural, and social factors on economic decisions of individuals and institutions.

Availability Heuristic

A cognitive bias where people make judgments about the likelihood of an event based on how easily examples come to mind.