Answer to Question #71949 in Microeconomics for Daniel

Question

The substitution effect can be defined as:
A.
the change in consumption that results from a change in the relative price of goods.
B.
the change in consumption that results from increased effective wealth due to lower prices.
C.
the change in consumption that results from increased effective wealth due to getting a raise.
D.
the change in income that results from increased effective consumption due to lower prices

Answer 1

Answer is «D» (the change in income that results from increased effective consumption due to lower prices).