Sam is spending his income on two goods and buys the quantities of the goods so that he achieves his best affordable combination of goods. If the price of one good falls, what is the substitution effect of the price fall?

Question

Accepted Answer

The change in the quantity bought of the lower priced good as Sam moves along the same indifference curve.

Answer

The price effect on Sam's income as Sam moves to a higher indifference curve.

Answer

The income in the quantities of the two goods bought.

Answer

The price effect on Sam's best affordable combination of goods.

Answer

The change in the quantity bought of the lower priced good as Sam moves to a higher indifference curve.

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Sam is spending his income on two goods and buys the quantities of the goods so ...

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