Figure 10-1 Figure 10-1 represents the demand for ice cream cones.
-Refer to Figure 10-1.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 10-1  Figure 10-1 represents the demand for ice cream cones.
-Refer to Figure 10-1.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 decrease in quantity demanded due to an increase in price is a reflection of the substitution effect, where consumers switch to alternative goods due to the higher price of ice cream cones. This is a result of a change in relative prices and is one of the two effects of a change in price, the other being the income effect which reflects the change in purchasing power due to a change in price.

Figure 10-1 Figure 10-1 Represents the Demand for Ice