The table below shows the total utility associated with various units of goods X and Y.Table 7.5

-The _____ effect indicates that an individual's income can buy more of all goods when the price of one good declines, everything else held constant.
A)scale
B)endowment
C)substitution
D)price
E)income

Question

The table below shows the total utility associated with various units of goods X and Y.Table 7.5
 
-The _____ effect indicates that an individual's income can buy more of all goods when the price of one good declines, everything else held constant.
A)scale 
B)endowment 
C)substitution 
D)price 
E)income

Quizplus · Accepted Answer

The income effect indicates that when the price of a good declines, an individual's purchasing power increases, allowing them to buy more of all goods, assuming their income remains constant. This is because their income can now buy more due to the lower price of the good, effectively increasing their real income.

The Table Below Shows the Total Utility Associated with Various