When a Consumer Experiences a Price Increase for an Inferior

question 117

Multiple Choice

When a consumer experiences a price increase for an inferior good, if the income effect is

• A)greater than the substitution effect, the demand curve will be downward sloping.
• B)greater than the substitution effect, the demand curve will be upward sloping.
• C)less than the substitution effect, the demand curve will be upward sloping.
• D)less than the substitution effect but the substitution effect is positive, the demand curve will be upward sloping.

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Definitions:

Macrosystem

The largest and most remote set of people and places to a person that still exercises a significant influence on them, according to ecological systems theory.

Exosystem

A term in ecological systems theory referring to the social settings that indirectly influence an individual's development, such as parental workplaces.

Microsystem

In ecological systems theory, the immediate environment in which individuals interact face-to-face, such as family, school, and peer groups.

Observational Learning

A learning process through watching the actions of others and then imitating or modeling those actions.