If $x$ is a normal good and the price of $x$ falls
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

As the price of the good falls, the consumer's purchasing power increases, leading to an income effect that induces the consumer to purchase more of the good. Additionally, since the good has become relatively cheaper compared to other goods, the substitution effect will induce the consumer to purchase more of the good as well. Therefore, both the income and substitution effect will lead to an increase in the quantity of $x$ demanded.

If xxx Is a Normal Good and the Price Of xxx Falls A) the Substitution Effect Will Induce the Consumer to x

If $x$ Is a Normal Good and the Price Of $x$ Falls
A) the Substitution Effect Will Induce the Consumer to x