3995EconomicsMedium
Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 Suppose that the price of a pair of socks falls from €5 to €2 The substitution effect is represented by the movement from point?
AX to point Z
BX to point X
CY to point X
DZ to point X
Correct answer
D. Z to point X
Explanation
The correct answer is Z to point X.