The ABC Music club charges a price of $16 for a CD and $8 for a cassette. Both CDs and cassettes are normal goods. If the ABC Music club increases the price of a CD to $18, everything else remaining the same, the
A) income effect induces club members to buy fewer CDs.
B) substitution effect induces club members to buy more cassettes and fewer CDs.
C) substitution effect induces club members to buy more CDs and fewer cassettes.
D) Both answers A and B are correct.
Correct Answer:
Verified
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