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If the Price of Good X Rises and X Is

Question 1

Multiple Choice

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.

Correct Answer:

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