- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Topics in Demand and Supply Analysis
- Subject 3. Substitution Effect, Income Effect, Normal and Inferior Goods
CFA Practice Question
The following figure shows Bobby's indifference map for soda and juice. B1 indicates his original budget line. B2 indicates his budget line resulting from a decrease in the price of soda. What change in quantity best represents his income effect?
A. 3
B. 7
C. 10
Explanation: 25 - 18 = 7
User Contributed Comments 2
| User | Comment |
|---|---|
| Hamad333_1 | why not 10? |
| xemex131 | 10 is the total effect, substitution + income |