Which Statement Is True for a Normal Good

question 12

Multiple Choice

Which statement is true for a normal good?

• A)The income effect dominates the substitution effect.
• B)The income effect reinforces the substitution effect.
• C)As income increases, consumption decreases.
• D)As income increases, consumption remains constant.
• E)As price falls, we cannot tell whether consumption increases or decreases.

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Definitions:

Incentives

External rewards or punishments that motivate behavior or inspire action.

Stimuli

External or internal factors that elicit a physiological or psychological response in an organism.

Intrinsic Motivation

The drive to engage in activities for their own sake, because they are interesting or enjoyable, without seeking external rewards.

Instinct

An innate, typically fixed pattern of behavior in animals in response to certain stimuli.