Question

what is income effect​

Answer 1

Answer:

Any increase or decrease in price correspondingly decreases or increases consumers' discretionary income which, in turn, causes a lower or higher demand for the same or some other good or service. It is one of the two effects caused by a price change; the other is substitution effect.

Answer 2

Answer:

What Is the Income Effect?

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.

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