Graph 22-8
-Refer to Graph 22-8.If the consumer is currently at point A on the graph shown, a change to point B as a result of a decrease in the price of potato chips would show the:
A)price effect
B)budget effect
C)substitution effect
D)income effect

Question

Graph 22-8 
-Refer to Graph 22-8.If the consumer is currently at point A on the graph shown, a change to point B as a result of a decrease in the price of potato chips would show the:
A)price effect 
B)budget effect 
C)substitution effect 
D)income effect

Quizplus · Accepted Answer

The movement from point A to B is caused by a decrease in the price of potato chips, which leads to a decrease in the opportunity cost of consuming potato chips relative to other goods. This results in the substitution effect, where the consumer substitutes towards potato chips and away from other goods.

Graph 22-8 -Refer to Graph 22-8.If the Consumer Is Currently at Point