When a Consumer Experiences a Price Increase for an Inferior

question 56

Multiple Choice

When a consumer experiences a price increase for an inferior good,which situation is possible

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

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Definitions:

Corporation

A legal entity that is separate from its owners, offering limited liability to its shareholders, and having the ability to enter into contracts, loan and borrow money, sue and be sued.

Financial Intermediary

An institution that facilitates the channeling of funds between lenders and borrowers, such as banks, investment funds, and insurance companies.

Loan Syndicates

Groups of banks or financial institutions that come together to provide a large loan to a single borrower, spreading the risk among them.

Partnerships

A business structure where two or more individuals share ownership, profits, and liabilities of the business.