If $x$ is an inferior good and the price of $x$ rises
A) the substitution effect will induce the consumer to purchase more $x$ and the income effect will induce the consumer to purchase more $x$ .
B) the substitution effect will induce the consumer to purchase more $x$ and the income effect will induce the consumer to purchase less $x$ .
C) the substitution effect will induce the consumer to purchase less $x$ and the income effect will induce the consumer to purchase more $x$ .
D) the substitution effect will induce the consumer to purchase less $x$ and the income effect will induce the consumer to purchase less $x$ .

Question

Quizplus · Accepted Answer

For an inferior good, when the price rises, the substitution effect leads to purchasing less $x$ because consumers substitute away from the now more expensive good. However, the income effect leads to purchasing more $x$ because the consumer feels poorer and buys more of the inferior good.

If xxx Is an Inferior Good and the Price Of xxx Rises A) the Substitution Effect Will Induce the Consumer to x

If $x$ Is an Inferior Good and the Price Of $x$ Rises
A) the Substitution Effect Will Induce the Consumer to x