The Demand Curve for Canned Peas Is Downward Sloping

question 221

Multiple Choice

The demand curve for canned peas is downward sloping. If the price of canned peas, an inferior good, rises,

• A) the income effect which causes you to reduce your canned peas purchases is smaller than the substitution effect which causes you to increase your purchases, resulting in a net increase in quantity demanded.
• B) the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded.
• C) both the income and substitution effects reinforce each other to decrease the quantity demanded.
• D) the income and substitution effects offset each other, but the price effect of an inferior good leads you to buy more canned peas.

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Definitions:

Attention

The cognitive process of selectively concentrating on one aspect of the environment while ignoring other stimuli.

Distractions

Anything that diverts an individual's attention from their desired focus, often leading to a reduction in performance or productivity.

Short-Term Memory

Limited-capacity memory system in which information is usually retained for up to 30 seconds, assuming there is no rehearsal of the information. Using rehearsal, individuals can keep the information in short-term memory longer.

Rehearsal

A cognitive process in which information is repeated or reviewed in the mind to aid in its retention or memorization.