would this create a substitution effect an income effect or

would this create a substitution effect, an income effect, or both?

the price of a bag of nuts rises by $5

Jessa receives $300 from her rich uncle

Your brother receives 10% decrease in his wage

Solution

The substitution effect is an effect of an increase in the price of a good that influences consumers to buy substitute goods.

The income effect shows the effect of change in income of an individual on his consumption pattern.

If the price of bag of nuts rises by $5: it denotes the substitute effect as it will influence the consumers to purchase the substitute products like dry beans.

Jessa receives $300 from her rich uncle: it indicates income effect as increase in income of Jessa would change her consumption power.

Your brother receives 10% decrease in his wage: in this case decrease in the wage of my brother will reduce his purchasing power. Therefore it refers to income effect.

would this create a substitution effect, an income effect, or both? the price of a bag of nuts rises by $5 Jessa receives $300 from her rich uncle Your brother

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