Economics · Business Economics
The substitution effect is usually larger than the income effect in the real world because ______.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Consumers' income is relatively smaller in relation to their total consumption needs
- 2Consumers only spend a small portion of their income on total consumption
- 3Consumers often consume a very small number of commodities overall
- 4Consumers usually spend only a small proportion of their income on any single commodity✓
Correct answer
Consumers usually spend only a small proportion of their income on any single commodity
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