Which statement is false?

Question

Quizplus · Accepted Answer

Both statements A and B accurately describe the substitution and income effects in economics. The substitution effect occurs when changes in relative prices or wage rates cause individuals to substitute one good or activity for another, such as trading leisure time for more work (and thus more money) when wages increase. The income effect describes how a change in an individual's income level affects their consumption choices, such as choosing more leisure time (and thus potentially less work and money) when income increases, allowing for more consumption of leisure without the need for additional income.

Which Statement Is False