A student asserts in class that the income and substitution effects lead to a decrease in the consumption of a normal good when the price decreases. Do you agree with the statement? Explain using an example

Please provide the best answer for the statement.

Disagree with the statement. Just the opposite is true of the income and substitution effects when the price of a normal good decreases. With a normal good such as pizza, if the price of pizza should fall, then the consumer has more real income. This increase in real income can be spent on pizza or other normal goods. Also, pizza is now cheaper relative to other substitute goods, such as hamburgers. The substitution effect means that the lower price of pizza will give the consumer an incentive to increase the quantity demanded for pizza.