Assertion (A): When the price of a good falls, a consumer buys more of it partly because his real income rises.
Reason (R): A fall in price raises the consumer's money income.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

A is the income effect, which is true for a normal good.
R is false: money income is unchanged; it is real income, what the money can buy, that rises.

Concept: Real versus money income
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsThe demand schedule, curve and law

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Ten questions from Demand & Its Determinants, at your own pace.

Assertion (A): When the price of a good falls, a consumer buys more of it partly because his real income rises.Reason (R): A fall in price raises the consumer's money income.

Explanation

Assertion (A): When the price of a good falls, a consumer buys more of it partly because his real income rises.
Reason (R): A fall in price raises the consumer's money income.