Figure 6.2 Figure 6.2 represents the demand for ice cream cones.
-Refer to Figure 6.2.When the price of ice cream cones increases from $2 to $3, quantity demanded decreases from 4 ice cream cones to 3 ice cream cones.This change in quantity demanded is due to

Question

Figure 6.2  Figure 6.2 represents the demand for ice cream cones.
-Refer to Figure 6.2.When the price of ice cream cones increases from $2 to $3, quantity demanded decreases from 4 ice cream cones to 3 ice cream cones.This change in quantity demanded is due to

Quizplus · Accepted Answer

The change in quantity demanded due to a price increase is attributed to the income and substitution effects. The income effect occurs because the consumer's purchasing power decreases with the price increase, making them less able to afford the same quantity. The substitution effect occurs because the relative price of ice cream cones increases compared to other goods, making consumers more likely to substitute away from ice cream cones to other goods.

Figure 62 Figure 6