Consider the income and substitution effects of price changes.The income effect refers to the change in quantity demanded that occurs as a result of a change in
A)relative prices,with real income held constant.
B)money income,with relative prices held constant.
C)marginal utility,with real income held constant.
D)preferences,with real income held constant.
E)real income,with relative prices held constant.

Question

Quizplus · Accepted Answer

The income effect refers to the change in quantity demanded resulting from a change in real income, with relative prices held constant.

Consider the Income and Substitution Effects of Price Changes