A consumer's bundle includes two normal goods, X and Y. According to the income effect, a(n) _____ in the price of good X or a(n) _____ in the price of good Y will cause the consumer to buy less of good X.

Question

Quizplus · Accepted Answer

For normal goods, an increase in the price of either good reduces the consumer's real income, leading them to buy less of both goods due to the income effect.

A Consumer's Bundle Includes Two Normal Goods, X and Y