Multiple Choice
Which of the following best describes the substitution effect caused by a price increase?
A) A change in consumption due to the fact that you will not buy goods whose marginal value is below the new price.
B) A change in consumption due to the fact that you cannot afford your original market basket.
C) A smaller percentage change in quantity than in price.
D) A larger percentage change in quantity than in price.
Correct Answer:
Verified
Correct Answer:
Verified
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