Asked by DIVYNE PERRIN on Jul 21, 2024
Verified
Jane is a utility-maximizing consumer who is spending her entire budget on the optimal quantity of wallets and eyeglasses.The price of wallets falls.Jane will _____ her consumption of wallets if wallets are a(n) _____ good and (because) the income effect _____ the substitution effect.
A) decrease;inferior;is weaker than
B) increase;inferior;is stronger than
C) increase;normal;reinforces
D) decrease;normal;reinforces
Optimal Quantity
The amount of a good or service that maximizes the net benefit to an individual or society, often considering factors like cost and utility.
Utility-maximizing Consumer
An economic concept where consumers aim to get the greatest utility or satisfaction from their purchases given their budget constraints.
Inferior Good
A type of good for which demand decreases as the income of consumers increases, unlike normal goods, where demand increases with rising income.
- Learn about the impact of income and substitution effects on the decision-making process of consumers.
- Recognize the distinction between normal and inferior goods, and how their demand curves behave.
Verified Answer
Learning Objectives
- Learn about the impact of income and substitution effects on the decision-making process of consumers.
- Recognize the distinction between normal and inferior goods, and how their demand curves behave.
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