Question

When the price of an inferior good falls the substitution effect?​

Answer 1

Answer:

Answer:When a good is an inferior good, the quantity of the good consumed will increase (decrease) as income decreases (increases). Because the quantity of the good consumed increases when income falls without a change in the relative price of the good, the demand curve for the good shifts rightward as income decreases. 1.

Answer 2

In the case of inferior goods the two effects of price change actually work in opposite directions. The substitution effect is always negative. It is because holding the real income constant; the consumer will always tend to substitute a good whose price has fallen for one whose price remains the same.