A decrease in the price of a movie ticket creates an increase in consumers' purchasing power, so that they can afford to buy more movie tickets. This is called the
A) substitution effect
B) income effect
C) demand effect
D) diminishing marginal utility effect

Question

Quizplus · Accepted Answer

The income effect describes a situation where a change in the price of a good or service affects the purchasing power of consumers, allowing them to buy more or less of that good or service with their given income. In this case, a decrease in the price of movie tickets increases consumers' purchasing power, enabling them to afford more tickets.

A Decrease in the Price of a Movie Ticket Creates