Author Question: Consider a downward-sloping demand curve. When the price of an inferior good decreases, the income ... (Read 76 times)

bobbie · **on:** Jun 29, 2018

Consider a downward-sloping demand curve. When the price of an inferior good decreases, the income and substitution effects

A) work in the same direction to increase quantity demanded.
B) work in the same direction to decrease quantity demanded.
C) work in opposite directions and quantity demanded increases.
D) work in opposite directions and quantity demanded decreases.

Question 2

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the

A) output effect. B) substitution effect. C) income effect. D) price effect.