For normal goods
A) the substitution and income effects of a price decrease will both decrease the quantity of the good demanded.
B) the substitution and income effects of a price decrease will both increase the quantity of the good demanded.
C) the substitution effect of a price decrease will increase the quantity of the good demanded while the income effect of a price decrease will decrease the quantity of the good demanded.
D) the substitution effect of a price decrease will decrease the quantity of the good demanded while the income effect of a price decrease will increase the quantity of the good demanded.

Question

Quizplus · Accepted Answer

For normal goods, both the substitution effect (the good becomes cheaper relative to other goods, so consumers substitute towards it) and the income effect (the consumer's purchasing power increases, allowing them to buy more of the good) of a price decrease will increase the quantity of the good demanded.

For Normal Goods