The price of a large pepperoni pizza used to be $14, but this week the price rose to $18. With a budget of just $30, you can't afford as many pizzas at the higher price. This change in consumer behavior reflects the

Question

Quizplus · Accepted Answer

The real income effect occurs when a price increase effectively reduces consumers' purchasing power, meaning they can afford less of the good with the same amount of money.

The Price of a Large Pepperoni Pizza Used to Be