A consumer's bundle includes two normal goods, X and Y. According to the income effect, a(n) _ in the price of good X or a(n) _ in the price of good Y will cause the consumer to buy less of good X.

The income effect establishes the changes in demand for goods and services as a result of changes in individuals' income. According to this approach, if the price of a good falls, the quantity demanded of that product will raise. If the price of the good rises, the quantity demanded will fall. In both cases, the income is kept constant. Normal and inferior goods and services are determined strictly in front of income fluctuations.

Thus, if "X" and "Y" are normal goods in the same bundle, assuming the income maintains its level, whether the price of "X" or "Y" increase the quantity demanded for both goods will decrease.

A consumer's bundle includes two normal goods, X and Y. According to the income effect, a(n) _____ in the price of good X or a(n) _____ in the price of good Y will cause the consumer to buy less of good X.

Respuesta :

Otras preguntas

A consumer's bundle includes two normal goods, X and Y. According to the income effect, a(n) _ in the price of good X or a(n) _ in the price of good Y will cause the consumer to buy less of good X.