Energy drinks and granola bars are normal goods. When the price of energy drinks decreases, the income effect causes a
A)shift to a lower indifference curve, and the consumer buys fewer granola bars.
B)shift to a higher indifference curve, and the consumer buys more granola bars.
C)movement along the indifference curve, and the consumer buys fewer granola bars.
D)movement along the indifference curve, and the consumer buys more granola bars.

Question

Quizplus · Accepted Answer

When the price of energy drinks decreases, the consumer's real income effectively increases, allowing them to reach a higher indifference curve and potentially buy more of both normal goods, including granola bars.

Energy Drinks and Granola Bars Are Normal Goods