Explain the meaning of income effect.
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The income effect describes how the change in the price of a good can change the quantity that consumers will demand of that good and related goods, based on how the price change affects their real income.
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In economics and particularly in consumer choice theory, the income-consumption curve is curve in a graph in which the quantities of two goods are plotted on the two axes; the curve is the focus of points showing the consumption bundles choosen at each of various levels of income.
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