Which of the following statements is false?
A) The income effect of normal goods counters the substitution effect so the demand curve is upsloping.
B) The income effect and the substitution effect reinforce each other when there are price changes for a normal good.
C) The income effect represents the decrease in quantity demanded caused by the implicit change in income due to a fall in the price of an inferior good but not for a normal good.
D) The substitution effect represents the change in quantity demanded solely due to a change in the relative price of a good.

Question

Quizplus · Accepted Answer

The demand curve for normal goods is downsloping, not upsloping. The income effect of a price decrease for a normal good increases the quantity demanded, which, along with the substitution effect, contributes to the downward slope of the demand curve.

Which of the Following Statements Is False