Pepsi and pizza are normal goods.When the price of pizza falls,the substitution effect causes a
A) shift to a lower indifference curve and the consumer buys less Pepsi.
B) shift to a higher indifference curve and the consumer buys more Pepsi.
C) movement along the indifference curve and the consumer buys more Pepsi.
D) movement along the indifference curve and the consumer buys less Pepsi.

Question

Quizplus · Accepted Answer

When the price of pizza falls, the substitution effect causes the consumer to buy more pizza and less Pepsi, resulting in a movement along the indifference curve. Thus, the correct choice is D.

Pepsi and Pizza Are Normal Goods