If a Good Is Normal,then the Income Effect Is _____

question 29

Multiple Choice

If a good is normal,then the income effect is _____ for a price increase and _____ for a price decrease.

• A) Positive; negative
• B) Positive; positive
• C) Negative; negative
• D) Negative; positive

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Definitions:

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices and quantities.

Demand Decreases

A situation where the quantity of a product or service sought by buyers is less than it was previously, often leading to lower prices.

Supply Increases

Supply increases refer to a situation in which the availability of a product or service in the market rises, which can be due to factors such as improved production methods or increased raw material availability.