Asked by
Calista Litke
on Oct 09, 2024
Verified
The income and substitution effects account for:
A) the upward-sloping supply curve.
B) the downward-sloping demand curve.
C) movements along a given supply curve.
D) shifts in the demand curve.
Substitution Effects
The change in the consumption pattern of goods due to a change in their prices, making consumers replace more expensive items with cheaper alternatives.
Downward-sloping
A descriptor often used for demand curves, indicating that as the price of a good or service decreases, the quantity demanded increases.
- Comprehend how changes in price affect the demand for goods through the mechanisms of the substitution and income effects.
- Gain insight into the law of demand and how it influences market mechanisms.
Verified Answer
KF
Learning Objectives
- Comprehend how changes in price affect the demand for goods through the mechanisms of the substitution and income effects.
- Gain insight into the law of demand and how it influences market mechanisms.
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