Asked by
INGRID JOHANA VARGAS MONTEALEGRE
on Oct 27, 2024
Verified
The income effect will play a greater role in a consumer's spending if the good:
A) accounts for a substantial share of the consumer's spending.
B) accounts for a small share of the consumer's spending.
C) is not subject to a budget constraint.
D) is not something the consumer needs.
Income Effect
Alterations in the financial state of individuals or economies and how these changes drive the demand for various goods or services.
Consumer's Spending
The total amount of money spent by households in an economy on goods and services.
- Understand how variations in price, the income effect, and the substitution effect are linked to consumer demand.
Verified Answer
SR
Learning Objectives
- Understand how variations in price, the income effect, and the substitution effect are linked to consumer demand.