Income and Substitution Effect Flashcards
1
Q
What is the Income effect?
A
When the price of a good rises, consumers are not willing to buy as much of the good because their purchasing power has decreased.
2
Q
What is the substitution effect?
A
When the price of one good rises, other goods become more attractive to buyers because they are relatively cheaper and a similar product.
3
Q
What percent of public housing is usually subsidized by the government
A
75%
