The substitution effect of a price change:   will always offset the income effect. will always result in the consumer buying less of a good at a higher price. dominates the income effect in the inferior good case. will always be lower than the income effect of the price change.

Economics For Today
10th Edition
ISBN:9781337613040
Author:Tucker
Publisher:Tucker
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 15SQ
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The substitution effect of a price change:

 

  1. will always offset the income effect.
  2. will always result in the consumer buying less of a good at a higher price.
  3. dominates the income effect in the inferior good case.
  4. will always be lower than the income effect of the price change.
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