Bart consumes food and clothing, which are both normal goods. Suppose that the price of food falls. The substitution effect of this price decrease is ________ and the income effect of this price decrease is ________.
A) that Bart buys more clothing and less food; that Bart buys more of both food and clothing
B) reflected by a change in the relative prices of food and clothing; is represented by a movement along the original indifference curve
C) reflected by a parallel shift outward of the budget line; that Bart earns more money each month
D) reflected by the change in the slope of the budget line; that Bart has greater purchasing power
Correct Answer:
Verified
Q323: Wendy spends $30 a week on movies
Q324: Which of the following statements is FALSE?
A)