The effect of a compensated price change is known as:
A) The price effect of a price change
B) The income effect of a price change
C) The substitution effect of a price change
D) The replacement effect of a price change

Question

Quizplus · Accepted Answer

The substitution effect of a price change refers to the change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute away from more expensive goods towards cheaper ones.

The Effect of a Compensated Price Change Is Known As