Which of the following is correct? When the price of normal good Z falls:
A)both income and substitution effects cause the consumer to buy more.
B)both income and substitution effects cause the consumer to buy less.
C)the income effect causes the consumer to buy less, but the substitution effect causes her to buy more.
D)the income effect causes the consumer to buy more, but the substitution effect causes her to buy less.
Answer:A
Which of the following is correct? When the price of normal good Z falls:
A)both income and substitution effects cause the consumer to buy more. B)both income and substitution effects cause the consumer to buy less. C)the income effect causes the consumer to buy less, but the substitution effect causes her to buy more. D)the income effect causes the consumer to buy more, but the substitution effect causes her to buy less.