A substitution effect
A)is due to the change in relative prices.
B)is known as the uncompensated response.
C)is known as excess burden.
D)is due to the loss of income because relative prices are unaffected.

Question

Quizplus · Accepted Answer

The substitution effect occurs when a change in the price of a good alters its relative price compared to other goods, leading consumers to substitute the cheaper good for the more expensive one.

A Substitution Effect