Question

What is meant by income effect of a rise in the prices of a commodity?​

Answer 1

Answer:

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Explanation:

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.

Answer 2

Answer: Income effect: (a) Quantity demanded of a commodity changes due to change in purchasing power (real income), caused by change in price of a commodity is called Income Effect, ... Thus, rise in price of commodity leads to fall in real income, which will thereby reduce quantity demanded is known as Income effect.

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