The effect of a change in price on the quantity bought when the consumer remains indifferent between the original and the new situation is called the
A) income effect.
B) indifference effect.
C) substitution effect.
D) demand effect.

Question

Quizplus · Accepted Answer

The effect of a change in price on the quantity bought when the consumer remains indifferent between the original and new situation is called the substitution effect. This occurs when a consumer switches to a substitute product in response to a change in price, keeping their overall level of satisfaction the same. The income effect refers to the change in quantity demanded due to a change in consumer income, while the indifference effect and demand effect are not commonly used terms in economics.

The Effect of a Change in Price on the Quantity