Which Effect of a Price Change Moves the Consumer Along

question 34

Multiple Choice

Which effect of a price change moves the consumer along the same indifference curve to a point with a new marginal rate of substitution?

• A)the budget effect
• B)the preference effect
• C)the substitution effect
• D)the income effect

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Definitions:

Tax Incentives

Financial discounts or benefits offered by governments to encourage certain behaviors or investments, reducing the tax liability for businesses or individuals.

Installment Purchase

A method of buying goods through a series of payments over time, where the buyer gains possession of the item immediately but pays for it in periodic installments.

Authorized Shares

The maximum number of shares that a corporation is legally allowed to issue, as specified in its articles of incorporation.