The substitution effect of a price change implies that as the price of a good falls,people are likely to buy less of the good whose price has fallen.

Question

Quizplus · Accepted Answer

The substitution effect of a price change implies that as the price of a good falls, people are likely to buy more of the good whose price has fallen, and less of a substitute good whose price has not changed. Therefore, the statement is false.

The Substitution Effect of a Price Change Implies That as the Price