If the price of prime rib falls,the income effect due to the price change will cause
A)an increase in the demand for prime rib.
B)an increase in the demand for flank steak,a substitute for prime rib.
C)an increase in the quantity of prime rib demanded.
D)an increase in the quantity of prime rib supplied.

Question

Quizplus · Accepted Answer

When the price of prime rib falls, consumers will have more purchasing power, leading to an increase in the quantity demanded of the product, but not an increase in demand. As a result, the income effect due to the price change will cause an increase in the quantity of prime rib demanded. Choices A and B are incorrect because they suggest an increase in demand, which is not accurate. Choice D is incorrect because a price change affects quantity supplied, not quantity demanded.

If the Price of Prime Rib Falls,the Income Effect Due