question archive George consumes only two goods, pizza and compact discs
George consumes only two goods, pizza and compact discs
Subject:EconomicsPrice: Bought3
George consumes only two goods, pizza and compact discs. Both are normal goods for George. Suppose the price of pizza decreases. George's consumption of compact discs will:
a.increase due to the income effect.
b.increase due to the substitution effect.
c.increase due to a negative income elasticity.
d.remain unchanged, since the income elasticity of pizza is greater than 0.
