The Substitution Effect of a Price Change Refers to

question 227

Multiple Choice

The substitution effect of a price change refers to

• A)the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.
• B)the shift of a demand curve when the price of a substitute good changes.
• C)the movement along the demand curve due to a change in purchasing power brought about by the price change.
• D)the shift in the demand curve due to a change in purchasing power brought about by the price change.

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Definitions:

Critical Thinking

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An approach to understanding behavior and mental processes through the study of the brain, nervous system, and physiological processes.

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Aristotle

An ancient Greek philosopher and polymath, whose works covered various subjects including physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology.