An example of the substitution effect dominating the income effect occurs when people take summer vacations rather than winter vacations, even though their pay is the same year-round.True

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Quizplus · Accepted Answer

The substitution effect dominating the income effect typically refers to changes in consumption patterns due to relative price changes, not seasonal preferences. The choice between summer and winter vacations is more about personal preference and timing rather than a substitution effect due to price changes.

An Example of the Substitution Effect Dominating the Income Effect