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If the commodity is normal then the Income Effect (I.E) and the Substitution Effect (S.E):

A. Both move together and reinforce each other

B. One moves and the other remains constant

C. Move in the opposite direction and neutralize each other

D. Both remain constant

Correct Answer :

A. Both move together and reinforce each other


If the commodity is normal then the Income Effect (I.E) and the Substitution Effect (S.E) both moves together and reinforce each other.When price falls, both effects lead to a rise in quantity demanded and when price rises, both effects lead to a drop in quantity demanded.}

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