Author Question: Nick considers macaroni and cheese to be an inferior good. As a result of macaroni and cheese being ... (Read 115 times)

V@ndy87 · **on:** Jun 29, 2018

Nick considers macaroni and cheese to be an inferior good. As a result of macaroni and cheese being an inferior good, the

A) substitution effect must be larger in magnitude than the income effect so that less is purchased as the price falls.
B) substitution effect must be smaller in magnitude than the income effect so that less is purchased as the price falls.
C) income effect is positive, so that more is purchased as income increases.
D) income effect is negative, so that less is purchased as income increases.

Question 2

If Dana spends all her income on ice cream and Mountain Dew and her marginal utility per dollar from ice cream is greater than her marginal utility per dollar from Mountain Dew, she should buy more ice cream and less Mountain Dew.

Indicate whether the statement is true or false