When the Price of a Good Falls, the Income Effect

question 458

Multiple Choice

When the price of a good falls, the income effect for a normal good implies that people buy

• A) less of that good because the relative price of the good has fallen.
• B) more of that good because the relative price of the good has risen.
• C) less of that good because they cannot afford to buy all the things they previously bought.
• D) more of that good because they can afford to buy more of all the things they previously bought.

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Definitions:

Unworried

Pertains to a state of not being anxious or concerned.

Conscientiousness

A personality trait characterized by organization, dependability, and a strong sense of duty.

Dependable

Capable of being relied upon; trustworthy and reliable in terms of consistency and performance.

Careful

Being careful involves acting with thought and caution to avoid harm or mistakes.