The Income Effect of a Price Change Is the Effect

question 80

Multiple Choice

The income effect of a price change is the effect on consumption changes as a result of a change in:

• A)income when all prices change in the same proportion.
• B)purchasing power caused by a change in the price of the good.
• C)income caused by a change in the price of labor.
• D)income sufficient to offset the effect of a price change.

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Definitions:

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A law enacted by a legislative body.

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