Identify the statement that is false. Assume that the price of good $x$ increases.
A) The substitution effect shows that the consumption of good $x$ falls, regardless of whether
$x$ is a normal or inferior good.
B) The income effect shows that the consumption of good $x$ rises if good $x$ is an inferior good.
C) The overall effect shows that the consumer purchases more of good $x$ if good $x$ is a Giffen good.
D) The overall effect shows that the consumer purchases more of good $x$ if good $x$ is an inferior good.

Question

Quizplus · Accepted Answer

The overall effect for an inferior good does not necessarily mean the consumer will purchase more of it when its price increases; this is only true for Giffen goods, which are a specific type of inferior good where the income effect outweighs the substitution effect.

Identify the Statement That Is False xxx Increases A) the Substitution Effect Shows That the Consumption of of Good

Identify the Statement That Is False $x$ Increases
A) the Substitution Effect Shows That the Consumption of of Good