Which statement is FALSE?
A)The income effect of normal goods counters the substitution effect,so the demand curve slopes upward.
B)The income effect and the substitution effect reinforce each other when the price of a normal good changes.
C)The income effect represents the decrease in quantity demanded caused by the implicit change in income due to a fall in the price of an inferior good but not of a normal good.
D)The substitution effect reflects the change in quantity demanded solely because of a change in the relative price of a good.

Question

Quizplus · Accepted Answer

The demand curve for normal goods slopes downward, not upward, because the income effect of a price decrease leads to an increase in quantity demanded, which reinforces the substitution effect, not counters it.

Which Statement Is FALSE