The Income Effect Shows That When the Price of a Good

question 272

Multiple Choice

The income effect shows that when the price of a good decreases

• A) income effectively rises and quantity demanded increases.
• B) income effectively decreases and quantity demanded decreases.
• C) people switch to more expensive goods.
• D) people switch to less expensive goods.

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Definitions:

Cuticle

Outer, thin layer, usually horny—for example, the outer covering of hair or the growth of the stratum corneum onto the nail.

Medulla

The innermost part of an organ or structure, such as the central region of the kidney or the lower part of the brainstem.

Central Axis

An imaginary line that runs through the center of a body or object, around which the body or object can theoretically rotate.

Medulla

An area at the base of the brainstem that controls vital functions such as heart rate, breathing, and blood pressure.