The Demand Curve for Corn Is Downward Sloping

question 175

Multiple Choice

The demand curve for corn is downward sloping.What happens if the price of corn, an inferior good, falls?

• A)The income effect which causes you to reduce your corn purchases is smaller than the substitution effect which causes you to increase your corn purchases, resulting in a net increase in quantity demanded.
• B)The income effect which causes you to increase your corn purchases is larger than the substitution effect which causes you to reduce your corn purchases, resulting in a net increase in quantity demanded.
• C)Both the income and substitution effects reinforce each other to increase the quantity demanded.
• D)The income and substitution effects offset each other, but the price effect of an inferior good leads you to buy less corn.

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Definitions:

Traditional Brainstorming

A conventional method of generating numerous ideas within a group setting without initial evaluation or critique.

Interacting

The act of communicating or working with others, often involving exchange of ideas or collaboration.

Structuring

The act of organizing or arranging parts or elements of something in a systematic way to form a coherent unit or structure.

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.