When measuring the substitution effect,one uses the change along
A) the old indifference curve.
B) the new indifference curve.
C) either the old or the new indifference curve.
D) the budget constraint.

Question

Quizplus · Accepted Answer

The substitution effect is measured by the change along the old indifference curve, reflecting how a consumer would substitute between goods when prices change, keeping utility constant.

When Measuring the Substitution Effect,one Uses the Change Along