Which of the following statements is FALSE?
A) The income effect of normal goods counters the substitution effect, so the demand curve slopes upward.
B) The income effect and the substitution effect reinforce each other when the price of a normal good changes.
C) The income effect represents the decrease in quantity demanded caused by the implicit change in income due to a fall in the price of an inferior good but not of a normal good.
D) The substitution effect reflects the change in quantity demanded solely because of a change in the relative price of a good.

Question

Quizplus · Accepted Answer

The income effect of normal goods does not counter the substitution effect; instead, both effects typically work in the same direction, leading to a downward-sloping demand curve for normal goods.

Which of the Following Statements Is FALSE