If the price of good X rises and X is a normal good, then
A) the income effect will induce the consumer to demand less of X and the substitution effect will induce him to demand more.
B) the income effect will induce the consumer to demand more of X and the substitution effect will induce him to demand less.
C) the income and substitution effects will both induce the consumer to demand more of X.
D) the income and substitution effects will both induce the consumer to demand less of X.

Question

Quizplus · Accepted Answer

When the price of a normal good increases, the income effect makes the consumer feel poorer, leading to a decrease in demand for the good. Simultaneously, the substitution effect causes the consumer to switch to cheaper alternatives, also decreasing demand for the good.

If the Price of Good X Rises and X Is