What effect is due to a price change that moves the consumer along the same indifference curve to a point with a new marginal rate of substitution
A)the budget effect
B)the preference effect
C)the substitution effect
D)the income effect

Question

Quizplus · Accepted Answer

This situation is described as the substitution effect, as the price change has led to the consumer substituting one good for another while still maintaining the same level of utility, resulting in a new marginal rate of substitution on the same indifference curve. The budget, preference, and income effects all refer to different reasons for changes in consumer behavior in response to a price change, but they do not directly apply to this particular scenario.

What Effect Is Due to a Price Change That Moves