hlo guys gud night sd..
. here is the question .what is negative income effect and substitution effect?
. here is the question .what is negative income effect and substitution effect?
Add an Answer
More Questions From This User See All
Copyright © 2024 EHUB.TIPS team's - All rights reserved.
Answers & Comments
negative income effect -: at first u need to know income effect. income effect refers to change in quantity demanded of commodity when real income of the consumer changes owing to change in own price of the commodity.
in case of normal goods : the income effect will be positive coz income increases quantity demanded also increase. the slope will be positive in case of normal goods.
Now u can come to ur main points negative income effect : giffen or inferior types of goods whose income effect is negative means higher the income lower the demand. the slope will be negative.
Substitution effect : it refers to Change in quantity demanded of commodity -x when relative price of the commodity Px/Py changes owing to change in price of x
hope this help ^.^