The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumers' purchasing power.
A)ceteris paribus
B)population
C)substitution
D)income

Question

Quizplus · Accepted Answer

The income effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumers' purchasing power. As the price of a good increases, the purchasing power of consumers' income decreases, and they may choose to buy less of the good. Conversely, as the price of a good decreases, the purchasing power of consumers' income increases, and they may choose to buy more of the good. The other options listed are not related to the change in quantity demanded resulting from a change in price.

The ________ Effect Refers to the Change in Quantity Demanded