what will be income effect in case of inferior good
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Answer: In case of inferior goods the income effect will work in opposite direction to the substitution effect. When price of an inferior good falls, its negative income effect will tend to reduce the quantity purchased, while the substitution effect will tend to increase the quantity purchased.
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For the inferior goods, the income effect dominates the substitution and leads consumers to purchase more a good, and less the substitute goods when the price rises.
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