Asked by
Erika Garris
on Oct 27, 2024
Verified
For most goods,demand curves slope downward because:
A) marginal utility rises as quantity demanded increases.
B) the substitution effect constitutes almost the entire effect of a price change,and this effect always causes quantity demanded and price to be inversely related.
C) the income effect constitutes almost the entire effect of a price change,and this effect always causes quantity demanded and price to be inversely related.
D) the income and substitution effects work in opposite directions.
Demand Curves
Graphs that show the relationship between the price of a product and the quantity of the product demanded.
Income Effect
The change in an individual's or economy's consumption patterns due to a change in real income.
Substitution Effect
The change in consumption patterns due to a change in the relative prices of goods, holding the consumer's utility level constant.
- Develop an understanding of the principles of income and substitution effects and their effects on consumer behavior.
- Recognize the disparities between normal goods and inferior goods, including how each of their demand curves operates.
Verified Answer
CB
Learning Objectives
- Develop an understanding of the principles of income and substitution effects and their effects on consumer behavior.
- Recognize the disparities between normal goods and inferior goods, including how each of their demand curves operates.
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