Multiple Choice
What is the substitution effect of a price change?
A) Consumers will buy more of the good whose relative price has risen and less of the good whose relative price has fallen.
B) When prices fall, consumers will have more purchasing power and buy more of the good whose price has fallen.
C) When prices fall, consumers will have more purchasing power and buy more of all goods.
D) Consumers will consume less of the good whose relative price has risen and more of the good whose relative price has fallen.
Correct Answer:
Verified
Correct Answer:
Verified
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