What Is the Benefit of Understanding the Income and the Substitution

Multiple Choice

What is the benefit of understanding the income and the substitution effects?

A) The income effect might run in the opposite direction of the substitution effect.
B) The income effect always runs in the opposite direction of the substitution effect.
C) The income and substitution effects just offset each other, which explains a lot.
D) The income and substitution effects are proportional to each other.