If a Good Is Normal, Then

question 12

Multiple Choice

If a good is normal, then:

• A)the income effect is larger than the substitution effect.
• B)the income effect moves in the same direction as the substitution effect.
• C)the income effect moves in the opposite direction of the substitution effect.
• D)the income and substitution effects are ambiguous.

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Definitions:

Squatter Settlement

An area of unauthorized or informal housing, often lacking basic services, created by people with nowhere else to live.

Developing Countries

States that have a lower standard of living, less developed industries, and a lower score on the Human Development Index compared to other countries.

Environmental Benefit

Positive effects or outcomes on the natural environment, including improved air and water quality, biodiversity preservation, and ecosystem resilience.

Urbanization

The process by which towns and cities are formed and become larger as more people begin living and working in central areas.