The ______ effect describes the change in consumer purchasing power that occurs when the price of a good changes.
A) demand
B) supply
C) income
D) substitution

Question

Quizplus · Accepted Answer

The income effect describes the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service. When the price of a good decreases, consumers have more purchasing power, allowing them to buy more of the good or service or allocate their income elsewhere.

The ______ Effect Describes the Change in Consumer Purchasing Power