When the Price of a Good Changes, the Income Effect

Multiple Choice

When the price of a good changes, the income effect can found by comparing the equilibrium quantities purchased:

A) the new budget line and a line parallel to the new budget line tangent to the old indifference curve.
B) on the old budget line and on the new budget line.
C) on the new budget line and a line parallel to the old budget line tangent to the new indifference curve.
D) on the old budget line and a line parallel to the old budget line tangent to the new indifference curve.