The Substitution Effect of a Price Change Is Described by Which

question 36

Multiple Choice

The substitution effect of a price change is described by which of the following statements?

• A) When the price of a good falls, consumers have more real income with the same nominal income and will now buy more of the good.
• B) When the price of a good falls, consumers will now substitute this lower priced good for relatively higher priced goods.
• C) The substitution effect is the relative change in the amount of a good consumed when the price of another good changes.
• D) The substitution effect shows how a change in income will affect the quantity of a good purchased.

---

Definitions:

Lifespan

The length of time a living being, especially a human, exists from birth to death.

Healthy Life Expectancy

The average number of years that an individual is expected to live in a state of good health, subtracting years of ill health adjusted for severity.

Population Density

A measurement of the number of individuals living per unit area.

Coronary Heart Disease

A condition characterized by the narrowing of the coronary arteries, leading to a decreased blood supply to the heart muscle, often resulting in chest pain or heart attacks.