The substitution effect
A) is generally so weak that its effect cannot be predicted.
B) for an increase in the relative price of a good is sometimes positive but sometimes negative.
C) measures the change in the quantity demanded of a good from a change in its relative price.
D) measures the change in the quantity of a good demanded brought about by a change in real income associated with a change in the price of the good.

Question

Quizplus · Accepted Answer

The substitution effect measures the change in the quantity demanded of a good due to a change in its relative price. It shows the effect of the price of a good on the quantity demanded of that good, assuming that the consumer’s real income and the price of other goods remain constant. The substitution effect can be positive or negative depending on whether the good is a normal good or an inferior good.

The Substitution Effect