Assume That Peanut Butter Is an Inferior Good

question 28

Multiple Choice

Assume that peanut butter is an inferior good.Which of the following best describes the income and substitution effects as the price of peanut butter rises?

• A)The substitution effect leads the consumer to buy more peanut butter while the income effect would cause the consumer to purchase less.
• B)Both the income and substitution effects would cause the consumer to purchase less peanut butter,although the substitution effect is larger.
• C)Both the substitution and income effects would cause the consumer to purchase more peanut butter.
• D)The substitution effect causes the consumer to buy less peanut butter while the income effect causes the consumer to purchase more.

---

Definitions:

Market Return

The total return on an investment over a specified period, including dividends, interest, and capital gains, as measured by the change in the market price.

Aggregate Interests

Aggregate interests refer to the collective interests or preferences of a group, community, or society, often considered in policy-making and political theory to reflect the general will.

Political Scientists

Scholars who study the origin, development, and operation of political systems and public policy.