A price change would have the smallest income effect on a
A) pack of chewing gum.
B) bicycle.
C) pair of shoes.
D) pickup truck.

Question

Quizplus · Accepted Answer

The income effect describes how a change in the price of a good affects consumer purchasing power. A pack of chewing gum, being a relatively inexpensive item, would have the smallest income effect because its price change would have a minimal impact on the consumer's overall budget or purchasing power compared to more expensive items like bicycles, shoes, or pickup trucks.

A Price Change Would Have the Smallest Income Effect on a