The Demand Curve for Corn Is Downward Sloping

question 291

Multiple Choice

The demand curve for corn is downward sloping. If the price of corn, an inferior good, falls,

• A) the income effect which causes you to reduce your corn purchases is smaller than the substitution effect which causes you to increase your corn purchases, resulting in a net increase in quantity demanded.
• B) the income effect which causes you to increase your corn purchases is larger than the substitution effect which causes you to reduce your corn purchases, resulting in a net increase in quantity demanded.
• C) both the income and substitution effects reinforce each other to increase the quantity demanded.
• D) the income and substitution effects offset each other, but the price effect of an inferior good leads you to buy less corn.

---

Definitions:

Sum of Squares for Error

The sum of the squared differences between the observed value and the estimated value of the parameter of interest, used as a measure of variation within a dataset.

Sum of Squares for Regression

The sum of squares for regression quantifies the variation explained by the regression model, comparing the fitted values against the mean of the dependent variable.

SSR

Stands for Sum of Squares due to Regression, which measures the variation explained by the regression line in the context of statistical analysis.

Simple Linear Regression

A statistical method for examining the linear relationship between two quantitative variables; one variable is used to predict the outcome of another.