Use the following figure to answer the question : Figure 16-1 :shows the isoquants,IQ 1 and IQ 2 ,for a competitive firm.

-Refer to Figure 16-1.The move from point B to point C represents the _____ of an input price change.
A)substitution effect
B)output effect
C)income effect
D)effect of diminishing returns

Question

Use the following figure  to answer the question : Figure 16-1 :shows the isoquants,IQ 1 and IQ 2 ,for a competitive firm.

-Refer to Figure 16-1.The move from point B to point C represents the _____ of an input price change.
A)substitution effect 
B)output effect 
C)income effect 
D)effect of diminishing returns

Quizplus · Accepted Answer

The move from point B to point C represents the output effect of an input price change, as it indicates a change in the quantity of output produced due to a change in the cost of inputs.

Use the Following Figure to Answer the Question