Energy Drinks and Granola Bars Are Normal Goods

question 523

Multiple Choice

Energy drinks and granola bars are normal goods. When the price of energy drinks decreases, the income effect causes a

• A)shift to a lower indifference curve, and the consumer buys fewer granola bars.
• B)shift to a higher indifference curve, and the consumer buys more granola bars.
• C)movement along the indifference curve, and the consumer buys fewer granola bars.
• D)movement along the indifference curve, and the consumer buys more granola bars.

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Definitions:

Product Market

The marketplace where final goods or services are offered to consumers, businesses, and the public sector.

Circular Flow Model

An economic model depicting the continuous, circular flow of goods, services, and money between households and businesses in an economy.

Households

Economic units consisting of all individuals who occupy a home, responsible for making consumption decisions.

Market System

In this model, the economic operations regarding investments, the scale of production, and the distribution strategy are guided by supply and demand laws, ensuring that the pricing of goods and services is freely determined through a system of unrestricted prices.