Good a (An Inferior Good) and Good B (A Normal

question 92

Multiple Choice

Good A (an inferior good) and Good B (a normal good) are viewed by consumers to be substitute products. Suppose that the price of Good B falls at the same time that consumer income increases. What is the net effect of these two events on equilibrium in the market for Good A?

• A) an increase in equilibrium quantity and an indeterminate effect on price
• B) a decrease in both the equilibrium price and quantity
• C) an indeterminate effect on quantity but an increase in price
• D) an increase in both the equilibrium price and quantity

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