Which of the following statements is true?
A) The effect of a compensated price change = the substitution effect of the price change + the income effect of the price change.
B) The effect of an uncompensated price change = the substitution effect of the price change - the income effect of the price change.
C) The effect of an uncompensated price change = the income effect of the price change - the substitution effect of the price change.
D) The effect of an uncompensated price change = the substitution effect of the price change + the income effect of the price change.
Correct Answer:
Verified
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