If the Income Effect of a Price Change Is Negative

question 93

Multiple Choice

If the income effect of a price change is negative and larger in absolute terms than the substitution effect,then the demand curve will be

• A)upward sloping.
• B)downward sloping.
• C)vertical.
• D)horizontal.
• E)of indeterminate slope.

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Definitions:

Market Prices

The current the current price at which an asset or service can be bought or sold in a particular market.

Dividends

Money given by a business to its stock owners, which comes from the profits the company has made.

Dividend Payments

Payments made by a corporation to its shareholders, usually derived from the company's profits.

Substantial Growth

A significant increase in a company's revenue, profits, or size within a short period of time.