Which of the following statements about the substitution effect of a pricechange 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.
Correct Answer:
Verified
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