For normal goods the substitution effect is:
A)unrelated to the price.
B)negatively related to the price.
C)positively related to the price.
D)ambiguously related to the price.

Question

Quizplus · Accepted Answer

The substitution effect for normal goods is negatively related to the price, meaning that as the price of a good increases, consumers are likely to substitute it with cheaper alternatives, and vice versa.

For Normal Goods the Substitution Effect Is