When the Price of a Normal Good Decreases, People Increase

question 373

Multiple Choice

When the price of a normal good decreases, people increase their consumption of the good. The reason is

• A) the law of diminishing marginal utility.
• B) the substitution and income effects.
• C) the substitution effect only.
• D) the income effect only.

Learn how to compute percent changes in financial analysis for period comparisons.

Acknowledge the importance of linking analysis conclusions with underlying information in financial reporting.

Understand standard financial ratios and their significance in financial analysis.

Know how to calculate and interpret trend percents in financial analysis.

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Definitions:

Secondary Sex Characteristics

Traits that distinguish the two sexes of a species, but are not directly involved in reproduction, such as facial hair in males or widened hips in females.

Testosterone

A steroid hormone produced mainly in the testes in males and the ovaries in females, playing a key role in the development of male reproductive tissues and secondary sexual characteristics.

Estrogen

A group of steroid hormones that play a critical role in the development and regulation of the female reproductive system and secondary sexual characteristics.

Cortisone

A glucocorticoid hormone used as a medication to treat inflammation, allergies, and rheumatoid arthritis among other conditions.