If a consumer is compensated for the income effect that occurs ...

[Alainaaa8]

If a consumer is compensated for the income effect that occurs when the price of a good increases, then his demand curves can never slope upward.
 
  Indicate whether the statement is true or false

Question 2

The amount of money one would have to take from a consumer to harm her by as much as the price increase is called
 
  A) compensating variation.
  B) structured settlement.
  C) equivalent variation.
  D) consumer surplus.

[sultansheikh]

Answer to Question 1

True . The demand curve would only include the substitution effect. Even for Giffen goods, dq/dp is negative holding utility constant.

Answer to Question 2

C