Economics · Consumer Behavior & Demand Theory
Which of the following statements regarding consumer demand theory is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The substitution effect of a price change is always positive
- 2The income effect of a price change is positive for normal goods✓
- 3The income effect of a price change is negative for inferior goods
- 4The income effect of a price change is positive and much stronger than substitution effect for Giffen goods
Correct answer
The income effect of a price change is positive for normal goods
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