ECONOMICS
CONSUMERS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following helps explain why the demand curve for a normal good is downward sloping?
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The income effect moves the quantity demanded in the opposite direction of the substitution effect
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The income effect dominates the substitution effect
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The income and substitution effects move the quantity demanded in the same direction
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With an increase in income, the consumer decreases consumption of the good
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Explanation:
Detailed explanation-1: -Hence, the income and substitution effects move the quantity demanded in the same direction and help explain why the demand curve for a normal good is downward sloping. So, answer option A) is correct.
Detailed explanation-2: -The correct answer is option E) The substitution effect Generally, consumers shift to substitute products when the prices of a regular product or service increase in the market. This results in the downward sloping of the demand curve for normal goods.
Detailed explanation-3: -The law of diminishing marginal utility. The income effect. The substitution effect. 13-Jan-2020
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