The Income-Effect

question 43

Multiple Choice

The income-effect:

• A)isolates the effect of a change in the relative price structure on the demand of the given commodity.
• B)is the sole cause of the increase in quantity demanded when the price of a good falls.
• C)is identical to the substitution effect for most goods.
• D)is the change in the quantity demanded of the given commodity due to a change in real income.
• E)is none of the above.

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Definitions:

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