Computer chips are a normal good.Suppose the economy slips into a recession so that income falls.As a result,the demand for computer chips ________ so that the price of a computer chip ________.
A) increases; rises
B) increases; falls
C) decreases; rises
D) decreases; falls
E) decreases; does not change

Question

Quizplus · Accepted Answer

As income falls during a recession, people are likely to have less disposable income to spend on luxury items, such as computers or electronics. Therefore, the demand for computer chips will decrease, and as a result, the price of a computer chip will fall.

Computer Chips Are a Normal Good