When the Price of an Inferior Good Falls, the Substitution

question 87

Multiple Choice

When the price of an inferior good falls, the substitution effect contributes to _____ in the quantity demanded, and the income effect _____ the substitution effect.

• A) a decrease; reinforces
• B) an increase; reinforces
• C) an increase; opposes
• D) a decrease; opposes

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Definitions:

Interest-Bearing Note

This is a debt instrument that pays interest to the holder at a fixed or variable rate until the maturity date or repayment of the principal amount.

Contingent Liabilities

Potential obligations that may arise depending on the outcome of a future event.

IFRS

International Financial Reporting Standards, which are accounting rules set by the International Accounting Standards Board (IASB) for the preparation of financial statements globally.

GAAP

Stands for Generally Accepted Accounting Principles, which are a common set of accounting rules and standards used in the United States.