2 years ago

Explain how the substitution affect in the income effect interact with changes in price to change the quantity demanded

1 answer:

6 0

Answer:

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 increase quantity demanded both because the good is now cheaper than substitute goods, and because the lower price means that consumers have a greater total purchasing power.

Explanation:

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