Suppose a consumer can purchase only two goods,beef and chicken.If the price of beef falls (with all other variables held constant),and the consumption of chicken increases,we can conclude that the increased consumption of chicken is due to
A)neither the income effect nor the substitution effect.
B)both the income effect and the substitution effect.
C)the income effect only.
D)the substitution effect only.
E)a change in the consumer's preference toward chicken.

Question

Quizplus · Accepted Answer

When the price of beef falls, the consumer has more real income to spend, which can lead to an increase in the consumption of chicken due to the income effect.

Suppose a Consumer Can Purchase Only Two Goods,beef and Chicken