Answer to Question #82296 in Microeconomics for Gaurang

Question #82296
Income and substitution effect
1
Expert's answer
2018-10-24T10:56:09-0400

The income effect demonstrates the ramifications for increased purchasing power on consumption. Correspondingly, the substitution effect expresses how changes in prices and relative income affects consumption (Mankiw, 2017). Thus, the substitution effect confirms that as the prices of products rises people will look for ways of replacing the ones which they deem expensive with less costly alternatives.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

Assignment Expert
25.10.18, 22:48

Dear Gaurang, You're welcome. We are glad to be helpful. If you liked our service please press like-button beside answer field. Thank you!

Gaurang
24.10.18, 18:22

Thanks for your help

Leave a comment

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS