Question

differentiate between the negative & positive income effect

Answer 1

hey...!!!
positive income effect means when our income increases then we will increase our consumption this is known as positive income effect.

negative income effect means when our income increases then we will decreases our consumption in case of inferior goods. inferior goods means low quality of goods . negative income effect states that when our income increases then we purchase deshi ghee rather than dalda ghee. so dalda ghee is a inferior goods.