Lecture -13100 Flashcards
1
Q
What is meant by money illusion
A
The perception by a consumer that income has increased.
2
Q
What is the relationship between the price of a substitute and quantity demanded
A
An inverse relationship
3
Q
What are the three possible relationships between income and quantity demanded.
A
normal & superior luxury good
4
Q
Explain the difference between normal and luxury/superior goods.
A
Normal- if income of consumer increases so will the quantity of products
