If good A is a normal good and its price decreases,the _____ effect(s)will cause a(n)_____ in consumption of it.
A) substitution;decrease
B) income;decrease
C) income;increase
D) substitution and income ;decrease

Question

Quizplus · Accepted Answer

A normal good is one whose demand increases with an increase in income. Therefore, if the price of a normal good A decreases, the income effect will cause an increase in its consumption as consumers' purchasing power has increased. There is no substitution effect involved as it is not affected by the price of any other good.

If Good a Is a Normal Good and Its Price