Which of the following best describes the concept of 'Income Effect' in consumer theory?
A. Change in demand due to a change in tastes
B. Change in quantity demanded due to a change in relative prices holding real income constant
C. Change in supply due to a change in input prices
D. Change in quantity demanded due to a change in real income resulting from a price change
Answer: Option D
Solution (By JKSSB Mock Tests)
The income effect refers to the change in quantity demanded of a good that results solely from the change in real income caused by a change in the price of the good.
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