The income effect causes quantity demanded to ________ when the price of a normal good decreases

1 answer:

3 0

For normal goods, the income effect and the substitution effect both work in the same direction; a decrease in the relative price of the good will result in an increase in quantity demanded both because the good is now cheaper than substitute goods, and because the lower price means that consumers have a greater total.

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The income effect causes quantity demanded to​ ________ when the price of a normal good​ decreases

The income effect causes quantity demanded to ________ when the price of a normal good decreases