alleryStart learning →Under the income effect, reduced buying power leads to buying less of a good when the good is:
AA normal good
BAn inferior good
CAn import good
DA perishable
Answer & Solution
Correct answer: A. A normal good
1. The direction of the income effect depends on the type of good.
2. The income effect means a higher price reduces the buying power of income.
3. That leads to buying less of the good when the good is normal.
4. An inferior good would respond in the opposite direction.
_Source: OpenStax Principles of Microeconomics for AP Courses 2e (CC BY 4.0), Ch 6 'Consumer Choices'_
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