6A-5 Income and Substitution Effects FIGURE 6-11

Multiple Choice

6A-5 Income and Substitution Effects FIGURE 6-11
-Refer to Figure 6-11.Suppose the consumer begins at E₁.The income and substitution effects of the reduction in the price of X are represented as follows:

A) the distance Q₁d shows the substitution effect and the distance Q₂e shows the income effect.
B) the distance de shows the income effect and the distance cd shows the substitution effect.
C) the distance Q₁Q₂ shows the income effect and the distance Q₂Q₃ shows the substitution effect.
D) the distance Q₁Q₂ shows the substitution effect and the distance Q₂Q₃ shows the income effect.
E) the distance Q₁Q₃ shows the substitution effect and the distance Q₂Q₃ shows the income effect.