If the Price of an Inferior Good Rises,the Income Effect

question 30

Multiple Choice

If the price of an inferior good rises,the income effect

• A)will have an uncertain effect on consumption of the good,and the substitution effect will decrease consumption.
• B)will decrease consumption of the good,and the substitution effect will decrease consumption.
• C)and the substitution effect will both increase consumption of the good.
• D)and the substitution effect will both decrease consumption of the good.
• E)will increase consumption of the good and the substitution effect will decrease consumption.

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Definitions:

FDA Announcement

An official statement released by the Food and Drug Administration related to approvals, safety information, or regulatory actions concerning drugs, food, or other products.

Quantity Supplied

The aggregate quantity of a product or service that suppliers are prepared and capable of offering for sale at a certain price during a defined timeframe.

Price Decrease

A reduction in the cost of a good or service that can result from various factors such as increased supply or decreased demand.

Supply

The complete quantity of a product or service that can be bought at a specific price point.