The substitution effect of a(n)
A)price increase works to reduce the quantity of the good demanded
B)price increase works to increase the quantity of the good demanded
C)price decrease works to reduce the quantity of the good demanded
D)income increase works to reduce the quantity of the good demanded
E)income decrease works to reduce the quantity of the good demanded

Question

Quizplus · Accepted Answer

The substitution effect occurs when the price of a good increases, causing consumers to switch to a similar but cheaper substitute. As a result, the quantity of the good demanded decreases.

The Substitution Effect of A(n)