Identify the Statement That Is True

question 9

Multiple Choice

Identify the statement that is true.Assume that the price of good increases.

• A) If x is a normal good, both the income and substitution effects lead to a fall in consumption of x.
• B) The substitution effect leads to a decrease in consumption of x only if x is an inferior good.
• C) If x is a normal good, the substitution effect alone leads to a decrease in consumption of x.
• D) If x is an inferior good, the income effect alone leads to a decrease in consumption of good x.

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Definitions:

Profit and Loss

A financial statement that summarizes revenues, costs, and expenses incurred during a specific period, typically used to assess a company's financial performance.

Liquidation Transactions

Financial operations associated with winding up a company's affairs, selling off its assets, and distributing the proceeds to creditors and shareholders.

Installment Program

A credit or loan arrangement that allows the borrower to pay back the principal and interest over a set period through regular payments.

Profit and Loss Ratio

Profit and Loss Ratio measures the relationship between profits gained and losses incurred in a business or trading activity.