Suppose the Price of Good X Falls

question 481

Multiple Choice

Suppose the price of good X falls. As a result, the quantity demanded for good X increases for a particular consumer. For this consumer, the substitution effect induced the consumer to purchase more X while the income effect induced the consumer to purchase less X. We can infer that X is a(n)

• A)normal good.
• B)inferior good.
• C)Giffen good.
• D)luxury good.

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Definitions:

Accounts Payable

Money owed by a business to its suppliers shown as a liability on a company's balance sheet.

Equipment

Durable physical assets used in operations, such as machinery and tools, which have a useful life longer than one accounting period.

Office Supplies

Consumable items used in offices for daily operations, such as paper, pens, and staplers, distinct from longer-term assets.

Accounts Payable

Liabilities of a company representing money owed to creditors for goods and services purchased on credit.