As the price of a good or service increase, consumers will purchase a lower quantity of the good or service, because consumers cannot afford the same quantity of that good or service at a higher price. This concept is known as the ______. (1 point)

Question

As the price of a good or service increase, consumers will purchase a lower quantity of the good or service, because consumers cannot afford the same quantity of that good or service at a higher price. This concept is known as the ______. (1 point)
Responses

inflation
inflation

income effect
income effect

substitution effect

GPT-4o mini · Answer

The correct response is **income effect**.