Multiple Choice
Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the substitution effect associated with a decrease in the price of Ramen noodles, by itself, will result in
A) a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles.
B) a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles.
C) an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles.
D) an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.
Correct Answer:
Verified
Correct Answer:
Verified
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