Question

Ditterentiate between income effect and substitute effect​

Answer 1

Explanation:

The income effect expresses the impact of increased purchasing power on consumption, while the substitution effect describes how consumption is impacted by changing relative income and prices. ... Some products, called inferior goods, generally decrease in the consumption whenever incomes increase.

Answer 2

Explanation:

The income effect expresses the impact of increased purchasing power on consumption, while the substitution effect describes how consumption is impacted by changing relative income and prices. ... Some products, called inferior goods, generally decrease in the consumption whenever incomes increase.