The substitution effect
A) is when individuals consume more of one good and less of another.
B) is associated with changes in relative prices.
C) will have no effect if goods are unrelated.
D) all of these answer options are correct.

Question

Quizplus · Accepted Answer

The substitution effect is when individuals consume more of one good and less of another, which is associated with changes in relative prices. This effect will typically occur when goods are related, but even if goods are unrelated, there may still be some level of substitution effect. Therefore, all of these answer options are correct.

The Substitution Effect