Ask Question
29 February, 22:45

Corey receives some utility from consuming a frozen dinner (an inferior good) but would much rather purchase healthier food (a normal good). Suppose the price of a frozen dinner increases and the quantity that Corey purchases increases. Assume that a frozen dinner is not a Giffen good. Which effect causes Corey's quantity demanded of a frozen dinner to increase?

+2
Answers (1)
  1. 1 March, 02:28
    0
    The effect that causes Corey's quantity demanded of a frozen dinner to increase is known as income effect

    Explanation:

    Income effect refers to the change in consumption pattern or in the amount of the good consumed as a result of changes in the consumer's utility and purchasing power. Income effect can be positive or negative.

    Here, Corey derives some utility from consuming a frozen dinner (an inferior good). Therefore, as the price increases, the income effect will induce Corey (the consumer) to purchase more.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Corey receives some utility from consuming a frozen dinner (an inferior good) but would much rather purchase healthier food (a normal ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers