Assume that a person only purchases two goods, food and clothing, and has a fixed budget constraint. Both goods are normal goods. If the price of food decreases, what will happen to the consumption of clothing based on the income effect?
Please provide the best answer for the statement.
The price decrease means that the real income of the person has increased. This income effect will give the person more money to spend on both food and clothing. The consumption of clothing will increase due to this income effect.
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The contemporary rate of unemployment that is often put forth as a benchmark high-employment level ranges from
a. 4.5 to 5 percent. b. 4.0 to 6 percent. c. 6 to 6.5 percent. d. 1 to 4.5 percent.
Why is water much cheaper than diamonds even though water is essential to human lives while diamonds are NOT?
What will be an ideal response?
The level of income below which the federal government classifies a family as poor is called the:
A. median income threshold. B. poverty threshold. C. absolute measure of poverty. D. relative measure of poverty.
Why is the equilibrium price the best deal available for both buyers and sellers?
What will be an ideal response?