-In the above figure, income is $8, the price of a soft drink is $1, and the initial price of a milkshake is $2. If the price of a milkshake decreases to $1, the income effect is the movement from point ________ to point ________.
A) a; b
B) b; d
C) b; c
D) a; c

Question

-In the above figure, income is $8, the price of a soft drink is $1, and the initial price of a milkshake is $2. If the price of a milkshake decreases to $1, the income effect is the movement from point ________ to point ________.
A) a; b 
B) b; d 
C) b; c 
D) a; c

Quizplus · Accepted Answer

The income effect is the change in consumption resulting from a change in real income, which occurs when the price of a good changes. Here, the price of a milkshake decreases, effectively increasing real income, leading to a movement from point b to point c.

-In the Above Figure, Income Is $8, the Price of a Soft