Question $5.$ A consumer, who has a fixed income in dollars, consumes petrol and

bread. Suppose that demand for each good increases with income. When the

price of petrol increases, ceteris paribus:

A$.$ The substitution effect on the consumption of petrol is positive, as the

consumer would have to increase his expenditure on petrol due to its higher

price.

B$.$ The income effect on the consumption of bread is negative, i$.$e$.$ the

consumer would consume less bread.

C$.$ If the income effect dominates the substitution effect, then the consumer

would consume more bread.

D$.$ If the income effect dominates the substitution effect, then the consumer

would consume more petrol.