Which of the following statements is true?
A. The effect of a compensated price change = the substitution effect of the price change + the income effect of the price change.
B. The effect of an uncompensated price change = the substitution effect of the price change - the income effect of the price change.
C. The effect of an uncompensated price change = the income effect of the price change - the substitution effect of the price change.
D. The effect of an uncompensated price change = the substitution effect of the price change + the income effect of the price change.
D. The effect of an uncompensated price change = the substitution effect of the price change + the income effect of the price change.
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In Figure 11.1, a decrease in the marginal propensity to save is represented by a change in the consumption function from
A) C1 to C3. B) C3 to C1. C) C2 to C1. D) C1 to C2.
An upward-sloping Engel curve indicates that
a. the good is normal. b. the good is inferior. c. demand for this good is elastic. d. demand for this good is inelastic.