Question

what is income effect ?explain with the help of dyagrame​

Answer 1

Answer:

Income effect – definition

The income effect is the effect on real income when price changes – it can be positive or negative. In the diagram below, as price falls, and assuming nominal income is constant, the same nominal income can buy more of the good – hence demand for this (and other goods) is likely to rise.

Explanation:

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Answer 2

Answer:

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Explanation:

Income effect shows this reaction of the consumer. ... Thus, the income effect means the change in consumer's purchases of the goods as a result of a change in his money income.