rogersdanny521 rogersdanny521
  • 14-10-2019
  • Biology
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The income effect causes quantity demanded to​ ________ when the price of a normal good​ decreases

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t2jonathan2
t2jonathan2 t2jonathan2
  • 14-10-2019

For normal goods, the income effect and the substitution effect both work in the same direction; a decrease in the relative price of the good will result in an increase in quantity demanded both because the good is now cheaper than substitute goods, and because the lower price means that consumers have a greater total.

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