When Oranges Increase in Price, the Income Effect

question 4

Multiple Choice

When oranges increase in price, the income effect

• A) decreases the consumption of oranges only if oranges are a normal good.
• B) decreases the consumption of oranges only if oranges are an inferior good.
• C) always increases the consumption of oranges.
• D) always decreases the consumption of oranges.

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Definitions:

Selective Observation

The process of focusing attention on certain aspects of the environment while ignoring others, often influenced by existing beliefs and biases.

Casual Observation

An informal method of gathering information or data without any structured procedure, often based on spontaneous or unplanned observation of events or behaviors.

Mystification

A process by which the true nature of a social situation or relation is obscured, making it difficult for those involved to understand it or challenge the status quo.

Systematic Observation

A methodical approach to data collection, where researchers observe subjects in their natural environment without intervening or altering conditions.