The substitution effect of a price change
A) outweighs the income effect for Giffen goods.
B) is equal to the income effect for normal goods.
C) is equal to the income effect for inferior goods.
D) will result in the consumer buying less of a good at a lower price.
E) will result in the consumer buying less of a good at a higher price.

Question

Quizplus · Accepted Answer

The substitution effect causes consumers to buy less of a good when its price increases, as they switch to relatively cheaper alternatives.

The Substitution Effect of a Price Change