The substitution effect measures how
A)the quantity demanded of one good is influenced by a change in income,with prices constant
B)the quantity demanded of one good is influenced by a change the price of another good
C)marginal utility per dollar spent is affected by income changes
D)an increase in the price of a good is effectively the same as a reduction in income
E)the quantity demanded of one good is influenced by a change in the price of that good,with income constant

Question

Quizplus · Accepted Answer

The substitution effect measures how the quantity demanded of one good is influenced by a change in the price of that good, with income constant. This means that the effect of a change in price on the quantity demanded of one good is isolated from the effect of a change in income on the quantity demanded of that same or other goods.

The Substitution Effect Measures How