The Income Effect of a Price Change Is Described by Which

question 86

Multiple Choice

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

• A) When the price of a good falls, consumers have an implicit increase in income and can now buy more of the good.
• B) When the price of a good falls, consumers will now substitute this lower priced good for more higher priced goods.
• C) The income effect is the relative change in the amount of a good consumed when the price of another good changes.
• D) The income effect shows how a change in income at a given price will affect the quantity of a good purchased.

---

Definitions:

Academic Consequences

Consequences that affect one's educational performance or status.

Legal Consequences

Results or outcomes that arise from actions that are regulated by law, such as penalties or fines for violating laws.

Medium

A means or channel of communication, expression, or storage, which can range from physical media to digital forms.

Document

A written, printed, or electronic piece of information that serves as an official record.