The Demand Curve for Corn Is Downward Sloping

question 130

Multiple Choice

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

• 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.

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