Question

Manuel is a lawyer who enjoys apples and pears. suppose that the price of apples increases. as a result, the purchasing power of manuel's paycheck is diminished. therefore, he reduces his consumption of all goods, including apples. this phenomenon is known as the effect.

Answer 1

This phenomenon is known as the "income" effect.

The income effect refers to an adjustment in the interest of a decent or administration, instigated by an adjustment in the purchasers' optional wage.  

The income effect is the impact on real income when value changes - it tends to be certain and negative. Beneath, as value falls, and expecting ostensible salary is steady, a similar ostensible pay can purchase a greater amount of the great - thus interest for this (and different products) is probably going to rise.