Question

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product. This statement describes

Answer 1

The statement describes the income effect.

What is the income effect?

The income effect looks at the effect of a change in the price of a good on disposable income.

When the price of a good decreases, real disposable income increases. As a result, consumers can afford to buy more of the goods as the consumers purchasing power has increased, holding money income constant.

To learn more about the income effect, please check: https://brainly.com/question/6863432

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