Suppose That Consumers' Preferences Are Well Behaved in That Properties

question 128

Multiple Choice

Suppose that consumers' preferences are well behaved in that properties 4-1 to 4-4 are satisfied.Furthermore,assume that both X and Y are normal goods and that the price of good X increases.Then,which of the following effects is known with certainty?

• A) The income and substitution effects reinforce one another, leading to an overall increase in the consumption of good X.
• B) The income and substitution effects reinforce one another, leading to an overall decrease in the consumption of good X.
• C) The income and substitution effects will have competing effects, leading to an indeterminate impact on the consumption of good X.
• D) The income and substitution effects will reinforce one another, leading to an overall increase in the consumption of good Y.

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Definitions:

Immune System

The complex network of cells, tissues, organs, and the substances they produce that helps the body fight infections and other diseases.

AIDS

Acquired Immunodeficiency Syndrome, a chronic, potentially life-threatening condition caused by the human immunodeficiency virus (HIV), which damages the immune system and impairs the ability to fight off organisms that cause disease.

HIV

Human Immunodeficiency Virus, a virus that attacks the immune system and can lead to acquired immunodeficiency syndrome (AIDS) if not treated.

Keratin

A tough, hard protein contained in skin, hair, and nails.