income effect

Substitution and Income Effect, Topics in Demand and Supply Analysis, CFA Level I, Economics

Sep 4,20

Blog article 4, Substitution and Income Effect, Topics in Demand and Supply Analysis, CFA Level 1 Economics We consider the household optimum in a two-goods world.If the price of the first good rises, then the budget line turns inwards on the x1 axis. We can then distinguish between – Overall effect, – Substitution effect and – Income effect where the …

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