-The above figure shows Bobby's indifference map for soda and juice.B1 indicates his original budget line.B2 indicates his budget line resulting from a decrease in the price of soda.What change in quantity best represents his substitution effect?
A)3
B)10
C)15

Question

-The above figure shows Bobby's indifference map for soda and juice.B1 indicates his original budget line.B2 indicates his budget line resulting from a decrease in the price of soda.What change in quantity best represents his substitution effect?
A)3 
B)10 
C)15

Quizplus · Accepted Answer

The substitution effect is represented by the movement from the original consumption point on B1 to the point on the new budget line B2 that remains tangent to the original indifference curve. This movement reflects the change in quantity consumed due to the relative price change, ignoring income effects.

-The Above Figure Shows Bobby's Indifference Map for Soda and Juice.B1