If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive,this describes the:
A)income effect.
B)substitution effect.
C)consumer surplus effect.
D)marginal-maximizing rule.

Question

Quizplus · Accepted Answer

This scenario describes the substitution effect, where the decrease in price of a good leads to a higher quantity demanded because consumers perceive it as a better alternative to other goods. The income effect refers to the change in quantity demanded due to a change in consumer income, consumer surplus effect relates to the difference between the maximum price a consumer is willing to pay and the actual price paid, and the marginal-maximizing rule involves purchasing goods until the marginal benefit equals the marginal cost.

If the Price of Coffee Cups Falls and the Consumer