Beer and pretzels are normal goods.When the price of beer falls,the income effect causes
A)the consumer to feel richer, so the consumer buys more pretzels.
B)the consumer to feel richer, so the consumer buys less pretzels.
C)pretzels to be relatively more expensive, so the consumer buys more pretzels.
D)pretzels to be relatively less expensive, so the consumer buys less pretzels.

Question

Quizplus · Accepted Answer

When the price of beer falls, the consumer's purchasing power increases, making them feel richer. As a result, they are likely to increase their consumption of normal goods, including pretzels. Therefore, the answer is A.

Beer and Pretzels Are Normal Goods