The Income Effect of a Decrease in the Price of Potatoes

question 16

Multiple Choice

The income effect of a decrease in the price of potatoes, an inferior good, is a(n) _____

• A) increase in the quantity demanded of onions.
• B) decrease in the quantity demanded of potatoes.
• C) increase in the demand for potatoes.
• D) increase in the quantity demanded of potatoes.
• E) decrease in the demand for onions.

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Definitions:

Complementary Goods

Products or services that enhance or are necessary for the use of another product, such as printers and ink cartridges.

Generic Goods

Products that are not branded and are sold without any trademark or logo. They are typically characterized by lower prices and are considered equivalent in quality to branded products in many cases.

Brand Extension

involves the use of an established brand name on a new product in a different category, leveraging the brand's existing recognition and goodwill to introduce new offerings.

Line Extension

The process of introducing new items in the same product category under the same brand name, often with new flavors, sizes, colors, or ingredients.