If a Good Is Normal and Its Price Decreases

question 11

Multiple Choice

If a good is normal and its price decreases,

• A)the income effect will be positive and the substitution effect will be positive.
• B)the income effect will be negative and the substitution effect will be negative.
• C)the income effect will be positive and the substitution effect will be negative.
• D)the income effect will be negative and the substitution effect will be positive.

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Definitions:

Compensation Strategy

A plan or approach for determining how employees will be rewarded for their work, including salaries, bonuses, and benefits.

Direct Pay

Compensation paid directly to employees for their work, including salaries, wages, and bonuses, not including indirect benefits like health insurance.

Indirect Pay

Refers to benefits or perks received by employees that are not part of their direct monetary compensation, such as health insurance, retirement plans, or paid time off.

Reward System

A system that recognizes and rewards employees for their contributions to the organization, often influencing their performance and motivation.