Asked by
Abbie Ramlochan
on Nov 16, 2024
Verified
Refer to Figure 21-12. Suppose that a consumer is originally at point R. Then the price of good X decreases. Which of the following represents the income effect of the price decrease?
A) The movement from point R to point S
B) The movement from point R to point T
C) The movement from point T to point S
D) The movement from point T to point R
Income Effect
The change in an individual's or economy's income and how that change affects the quantity demanded of a good or service.
Price Decrease
A reduction in the cost of a good or service, which can increase consumer demand but may decrease supplier profits.
- Acquire an understanding of the role that income and substitution effects play in shaping consumer behavior.
- Identify the best selection for consumers in a range of scenarios.
Verified Answer
EB
Learning Objectives
- Acquire an understanding of the role that income and substitution effects play in shaping consumer behavior.
- Identify the best selection for consumers in a range of scenarios.