Consider the substitution and income effects of a 15% increase in the price of a good.Of the goods listed below,which is most likely to have the smallest income effect?
A)groceries
B)restaurant meals
C)gasoline
D)paperclips
E)dishwashers

Question

Quizplus · Accepted Answer

Paperclips are typically a small portion of a consumer's budget, so a price increase would have a minimal impact on overall income, resulting in a smaller income effect compared to other goods.

Consider the Substitution and Income Effects of a 15% Increase