When a consumer experiences a change in price, what two effects do economists consider?
A)the preference effect and the budget effect
B)the income effect and the substitution effect
C)the price effect and the preference effect
D)the complement effect and the substitute effect

Question

Quizplus · Accepted Answer

Economists consider the income effect and the substitution effect when a consumer experiences a change in price. The income effect refers to the change in purchasing power that results from a change in price, while the substitution effect refers to the tendency for consumers to switch to a substitute product when the price of a particular product increases.

When a Consumer Experiences a Change in Price, What Two