The substitution effect
A)is when individuals consume more of one good and less of another.
B)is associated with changes in relative prices.
C)will have no effect if goods are unrelated.
D)is all of the above.

Question

Quizplus · Accepted Answer

The substitution effect involves changes in consumption patterns due to changes in relative prices, leading individuals to consume more of one good and less of another. It is relevant when goods are related in terms of substitutability.

The Substitution Effect