The income effect of a price change is?
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Explanation:
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Answer:
What Is the Income Effect?
In microeconomics, the income effect is the change in demand for a good or service caused by a change in a consumer's purchasing power resulting from a change in real income. This change can be the result of a rise in wages etc., or because existing income is freed up by a decrease or increase in the price of a good that money is being spent on.
KEY TAKEAWAYS
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.
The change in the quantity demanded resulting from a change in price of a good can vary depending on the interaction of the income and substitution effects.