What does the income effect refer to?

The income effect refers to the phenomenon where changes in a consumer's income influence the quantity of goods demanded. When an individual's income increases, they tend to purchase more goods and services, reflecting a greater ability to satisfy their needs and wants. Conversely, if their income decreases, they generally buy fewer products due to budget constraints. This effect highlights how variations in income can lead to shifts in consumer behavior and demand patterns, making it a crucial concept in understanding market dynamics and consumer decision-making.

The other options delve into different aspects of consumer behavior but do not specifically capture the essence of the income effect as it relates to quantity demanded in response to income changes. As such, B accurately encompasses what the income effect entails, making it the correct choice.