The total effect of a price change of a commodity is

Substitution Effect + Price Effect

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Substitution Effect + Income Effect

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Substitution Effect + Demonstration Effect

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Substitution Effect minus Income Effect

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Solution

The correct option is B Substitution Effect + Income Effect
The total effect of a price change of a commodity is substitution effect plus income effect. The income effect is the change in consumption patterns due to a change in purchasing power. This occurs with income increases, price changes, and even currency fluctuations.

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Similar questions

Explain the effect of an increase in the income of buyers of a normal commodity on its equilibrium price.

Substitution effect takes place when price of the commodity becomes:

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