Respuesta :
You obtain a raise from $10 to $12.50 and choose to cut down on your work hours to have more time for partying. this is expressive of the substitution effect. False
What is substitution and income effect?
The income effect is the difference in the consumption of goods by consumers based on their income (purchasing power). The substitution effect happens when customers replace more affordable items with more expensive ones due to price changes or when their economic conditions improve, and vice-versa. The substitution effect estimates the change in consumption such that the customer's level of utility does not change.
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