When a Consumer Experiences a Price Increase for an Inferior

question 1

Multiple Choice

When a consumer experiences a price increase for an inferior good,it is possible that the income effect is

• A)greater than the substitution effect and the demand curve will be downward sloping.
• B)greater than the substitution effect and the demand curve will be upward sloping.
• C)less than the substitution effect and the demand curve will be upward sloping.
• D)less than the substitution effect but the substitution effect is positive and the demand curve will be upward sloping.

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Definitions:

Parol Evidence Rule

A legal principle that prevents parties in a contract dispute from presenting evidence of prior or concurrent oral agreements that would contradict the written terms of the contract.

Rent

The payment made by a tenant to a landlord for the use of a property, room, or apartment for a designated period.

Profits

The financial gain derived from a business activity after deducting expenses.

Rectification

The legal process of amending a document or agreement to reflect what the parties intended to agree upon.