The substitution effect of a price change refers to
A)the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.
B)the shift of a demand curve when the price of a substitute good changes.
C)the movement along the demand curve due to a change in purchasing power brought about by the price change.
D)the shift in the demand curve due to a change in purchasing power brought about by the price change.

Question

Quizplus · Accepted Answer

The substitution effect refers to the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes. It is a movement along the demand curve, not a shift. Choices B and D refer to a shift in the demand curve, while C refers to the income effect.

The Substitution Effect of a Price Change Refers to