When the Price of a Good Falls, the Income Effect

question 42

Multiple Choice

When the price of a good falls, the income effect for a normal good implies that people buy

• A) more of that good because they can afford to buy more of all the things they previously bought.
• B) less of that good because they cannot afford to buy all the things they previously bought.
• C) more of that good because the relative price of the good has risen.
• D) less of that good because the relative price of the good has fallen.

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Definitions:

Individual Differences

Individual Differences refer to the distinct variations among people in their behavior, emotion, and cognition, emphasizing the unique patterns of characteristics in each person.

Types of Depression

Various forms of depression which may differ in their symptoms, duration, and the underlying causes, including major depressive disorder, persistent depressive disorder (dysthymia), and seasonal affective disorder, among others.

Emotional Pain

A form of suffering associated with psychological distress, such as sadness, anxiety, or regret, without physical cause.

Evolutionary Function

The role or purpose an adaptation serves in promoting the survival and reproductive success of an organism, as explained by evolutionary theory.