The effect of a change in price on the quantity bought, keeping the consumer on the same indifference curve, is called the
A) price effect.
B) substitution effect.
C) income effect.
D) real effect.

Question

Quizplus · Accepted Answer

The substitution effect describes how a change in price influences the quantity bought, with the consumer remaining on the same indifference curve, as it reflects the change in relative prices that encourages consumers to substitute away from more expensive goods towards cheaper ones.

The Effect of a Change in Price on the Quantity