Suppose the Price of Potatoes Falls and There Is a Decrease

question 20

Multiple Choice

Suppose the price of potatoes falls and there is a decrease in the purchases of potatoes, what can we infer?

• A)The income effect is negative and exceeds the substitution effect.
• B)The income effect is negative and reinforces the substitution effect.
• C)The income effect is positive and exceeds the substitution effect.
• D)The income effect is positive and reinforces the substitution effect.
• E)The income effect is negative and just about offsets the substitution effect.

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Definitions:

Fertility

Fertility refers to the natural capability to produce offspring, often measured by the number of births per population segment over a given time period.

Standard Of Living

A level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographical area.

Karl Marx

A 19th-century philosopher, economist, and revolutionary who is most famous for his theories about capitalism and communism.

Thomas Malthus

An English cleric and scholar influential in the fields of political economy and demography, best known for his theory on population growth.