The substitution effect of a price change is represented by ________.
A) a movement along the same indifference curve
B) a movement to a different indifference curve
C) a change from the initial budget constraint to a new budget constraint
D) a change in the slope of the initial budget constraint

Question

Quizplus · Accepted Answer

The substitution effect of a price change is represented by a movement along the same indifference curve. This occurs when a change in the relative pricing of two goods causes consumers to shift their consumption toward the relatively more affordable good.

The Substitution Effect of a Price Change Is Represented by ________