Final answer:
When the price of candy rises, if the substitution effect is stronger than the income effect and both goods are normal, Jake will eat more chips and less candy.
Step-by-step explanation:
If the substitution effect is stronger than the income effect, Jake's consumption of chips and candy will be affected as follows when the price of candy rises, given that both are normal goods. He will consume more of the good with a relatively lower price—chips—and less of the good with a relatively higher price—candy. Thus, when the price of candy increases, and considering both are normal goods, the correct response is that he eats more chips and less candy (option a).
The substitution effect encourages consumers to substitute a less expensive good for a more expensive one when prices change. In contrast, the income effect suggests that as prices rise, even without a change in actual income, buying power decreases, and thus consumption of normal goods declines. Since the question specifies that the substitution effect is stronger, this means Jake will substitute candy (now more expensive) with more chips, while the weaker income effect will not significantly decrease his overall consumption level of normal goods.