The Substitution Effect Graphically Is Always Denoted

question 80

Multiple Choice

The substitution effect graphically is always denoted:

• A)by movement along the original indifference curve, whereas the income effect is represented by a rotation of the budget line.
• B)by moving in the direction of the item that is becoming relatively more expensive.
• C)by moving in the direction of the item that is becoming relatively cheaper and the income effect is always denoted by a rotating budget line.
• D)by movement along the original indifference curve, whereas the income effect is represented by a parallel shift of the budget line.