The substitution effect of the price increase: a. is in the same direction as the income...
The substitution effect of the price increase:
a. is in the same direction as the income effect.
b. is in the same direction as the price change.
c. is in the opposite direction to the price change.
d. depends on whether the good in normal or inferior.
Homework Answers
Answer
Option c
c. is in the opposite direction to the price change.
The substitution effect is in the opposite direction as the increase in price decreases the quantity and decrease in price increases the quantity.
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The substitution effect of the price increase:
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