The Income Effect of a Price Change Refers to

question 45

Multiple Choice

The income effect of a price change refers to

• A)the change in demand that occurs when consumer income changes.
• B)the change in the quantity demanded that results from a change in price, making the good more or less expensive relative to other goods, holding everything else constant.
• C)the change in demand that occurs when both income and price change.
• D)the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant.

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Definitions:

Door-In-The-Face Technique

A persuasion strategy whereby a large, unreasonable request is made first with the expectation of being refused, followed by a smaller, more reasonable request.

Foot-In-The-Door Technique

A persuasion strategy involving getting a person to agree to a small request as a precursor to making a larger request.

Foot-In-The-Door Phenomenon

A psychological tactic wherein agreeing to a small request increases the likelihood of agreeing to a larger request later.

Authority Figure

An individual who holds a position of power, influence, or respect, often within a hierarchical structure, and whose directives are expected to be followed.