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Substitution & Income Effects: Impacts on Supply & Demand Video

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Due to the substitution effect, if the price of a good is increased, people will:

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1. If I receive a salary raise of 10%, the income effect says that I will:

2. Good A and Good B are complementary goods. If the price of Good A rises, what is likely to happen to Good B?

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About This Quiz & Worksheet

These interactive study resources will test your understanding of substitution and income effects. Quiz questions will gauge what you know about things like what people will do if prices are increased and what the Income Effect says about a raise.

Quiz & Worksheet Goals

Use these study tools to:

  • Determine what the Substitution Effect says about complementary goods
  • Recognize what might happen should your pay be cut by a given amount
  • Name what kind of good was a cake pop from a given example

Skills Practiced

The following study skills will be practiced:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on substitution and income effects
  • Critical thinking - apply relevant concepts to examine information about pay cuts and raises in a different light
  • Interpreting information - verify that you can read information regarding what the Substitution Effect says about complementary goods

Additional Learning

This lesson will guide you as you study this subject of substitution and income effects. The lesson is named Substitution & Income Effects: Impacts on Supply & Demand and it will cover the following study points:

  • Define Substitution Effect
  • Identify Income Effect
  • Explain the impact of these effects on markets
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