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Which of the Following Statements About the Substitution Effect of a Price

Question 15

Multiple Choice

Which of the following statements about the substitution effect of a price change is true?


A) It is caused by a change in relative prices.
B) It affects the consumer's ability, rather than willingness, to purchase a good.
C) It assumes that the consumer substitutes more expensive goods for cheaper ones when income increases.
D) It is usually equal to the income effect.
E) It may cause the consumer to buy less of the good when its price falls.

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