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When the Price of a Good Falls, the Income Effect

Question 131

Multiple Choice

When the price of a good falls, the income effect for an inferior good implies that people will buy


A) less of that good because they can afford to buy more of the things they previously bought.
B) more of that good because the relative price of the good has risen.
C) less of that good because the relative price of the good has fallen.
D) more of that good because they can afford to buy more of the things they previously bought.

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