refer to the following figure that shows the effect of an INCREASE in the price of X.

-The income effect of the price change is the change in the consumption of X from
A) 5 to 3.
B) 6 to 3.
C) 6 to 5.
D) 6 to 8.
E) none of the above

Question

refer to the following figure that shows the effect of an INCREASE in the price of X.
 
-The income effect of the price change is the change in the consumption of X from
A) 5 to 3. 
B) 6 to 3. 
C) 6 to 5. 
D) 6 to 8. 
E) none of the above

Quizplus · Accepted Answer

The income effect refers to the change in consumption resulting from a change in real income, which occurs when the price of a good changes. The change from 5 to 3 units of X indicates a decrease in consumption due to a decrease in real income, which aligns with the income effect.

Refer to the Following Figure That Shows the Effect of an INCREASE