If steak is a normal good and its price rises:
A)the amount purchased may either increase or decrease depending on the relative importance of the income and substitution effects.
B)both the income and substitution effects suggest that less will be purchased.
C)the substitution effect suggests more will be purchased, but the income effect suggests less will be purchased.
D)the income effect suggests more will be purchased, but the substitution effect suggests less will be purchased.
Answer:B
If steak is a normal good and its price rises:
A)the amount purchased may either increase or decrease depending on the relative importance of the income and substitution effects. B)both the income and substitution effects suggest that less will be purchased. C)the substitution effect suggests more will be purchased, but the income effect suggests less will be purchased. D)the income effect suggests more will be purchased, but the substitution effect suggests less will be purchased.