The Demand Curve for Corn Is Downward Sloping

question 291

Multiple Choice

The demand curve for corn is downward sloping. 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:

Unconscious Forces

Psychological factors that influence behavior and decision-making without an individual's conscious awareness, as theorized in psychoanalytic psychology.

Psychosocial Development

Psychosocial development refers to the theory originated by Erik Erikson that describes how individuals develop social and emotional skills across eight stages from infancy to adulthood.

Erikson

Erik Erikson was a developmental psychologist and psychoanalyst known for his theory on the psychological development of human beings, which includes eight stages from infancy to adulthood.

Autonomy

The capacity to make an informed, uncoerced decision freely; a crucial aspect of individual freedom and self-determination.