Price effect is
A)income effect - substitution effect
B)substitution effect - income effect
C)income effect + substitution effect
D)income effect + substitution effect- negative effects

Question

Quizplus · Accepted Answer

The price effect is the total effect of a change in the price of a good on the quantity demanded of that good. It is composed of both the income effect, which is how the change in price affects consumer purchasing power, and the substitution effect, which is how the change in price alters the relative attractiveness of other goods. Therefore, the price effect is the sum of the income effect and the substitution effect.

Price Effect Is