The income effect of a price change refers to the impact of a change in _____

Question

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The income effect of a price change refers to the impact that a change in the price of a good has on a consumer's real income. When the price of a good increases, the consumer's purchasing power decreases and their real income is reduced. As a result, they may choose to purchase less of the good or look for cheaper substitutes. Conversely, if the price of a good decreases, the consumer's purchasing power increases and their real income is increased. This could lead them to purchase more of the good or substitute it for other, more expensive goods.

The Income Effect of a Price Change Refers to the Impact