As a result of the superb economics essay that you wrote during this quarter,you won the Adam Smith prize of $100.The receipt of these funds would be an example of

Question

Quizplus · Accepted Answer

The receipt of the $100 prize is an example of a pure income effect, as it increases the consumer's purchasing power and allows for an increase in consumption of all goods, without needing to substitute between them. The substitution effect arises when a change in relative prices of goods leads to a change in consumer behavior towards one good over another. Since there has been no change in relative prices, there is no substitution effect. Therefore, choices A, B, and D are not the best choices.

As a Result of the Superb Economics Essay That You