If the price of muffins, a normal product you enjoy, rises,
A) the substitution effect which causes you to decrease your muffin consumption outweighs the income effect which causes you to increase your muffin consumption, resulting in fewer muffins purchased.
B) both the income and substitution effects lead you to buy fewer muffins.
C) the income and substitution effects offset each other but the price effect leads you to buy fewer muffins.
D) the income effect which causes you to decrease your muffin consumption outweighs the substitution effect which causes you to increase your muffin consumption, resulting in fewer muffins purchased.
Correct Answer:
Verified
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